The stock market fluctuates on a variety of factors, so guessing what the market is going to do is just that - guessing. Even the most experienced market analyst in the world can be left gaping at a stock market loss that was simply and utterly unseen. For obvious reasons, this is why you don’t want to put all your eggs in one basket, as the old saying goes. The whims of the stock- buying public are hard to fathom, and can change on news that is totally unrelated to anything to do with the company stock itself. The same will be true when, in just two short months, Americans will vote for the next President of the United States.
Both the outcome and the lead-in to the 2012 Presidential election will create a tumultuous two months in the stock market, so savvy investors will be paying close attention to approval ratings and stock prices. To get in on this issue, it’s important to pay close attention to which companies support which candidate. Then, determining which stocks will be winners in six months will simply be a matter of watching which candidate is likely to be elected. If only life were so simple, we might all be millionaires. While this method of picking stocks might sound good, it’s far from foolproof, and can only be relied upon for as long as you are brave enough to hold on for the ride.
Unfortunately, the more likely scenario reads like this: If Obama is re-elected, stocks will drop because many investors who have the power to influence stock prices will sell shares to place their money in safer vehicles, such as bond funds and commodities in anticipation of other investors doing the same, which would slow the economy or keep it at its current pace.
Republicans, as opposed to Democrats, are more fiscally-minded. Generally speaking, they support government expenditures on defense while eschewing excessive waste on what they consider social programs. It's important not to count out other companies, as well, though. If Romney is elected, and if he does indeed repair the economy as he promises, then the overall effect on the stock market would be enormously positive.
What this means to the average investor is that safe bets in the stock market can be found regardless of who is elected during the 2012 Presidential election, but there are pitfalls, as well. Should Obama be re-elected, safe bets for stocks might include food producers, companies that make or sell baby items, and other companies who have chosen to support him.
On the other hand, safe bets should Romney be elected might include defense contractors, oil companies and financial institutions. Considering his stance on health care, a good choice might be any pharmaceutical companies or health insurance companies who contribute to his campaign.
As with any stock pick, there will be both winners and losers regardless of what the economy does. After all, when the economy tanked late in the last decade, there were still encouraging numbers coming from some companies. Wal-Mart and Dollar General are two examples of stocks that rose tremendously while the remainder of the market saw its biggest losses in decades. The reason for this? Savvy investors realized that with the cuts that average families would have to make to maintain their budgets, shopping at typical stores would be difficult. They bought up shares of discount stores because they saw where the market was heading.
At the end of the day, no candidate for president or their respective party, has any impact on the stock market by themselves. Investment en masse in any company will drive up the price, giving the company more cash flow with which to invest, which can be used advantageously to expand operations, hire new employees, and even update existing infrastructure. Without this, the politicians are nothing but talking heads. Fortunately, that puts us in charge of our own economy.
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