The campaign is in full swing, even with voting still many months away.
Issues at the forefront of the campaign could have serious effects on investors.
Dispassionate analysis of the issues will be more important to investing than picking a candidate.
This is the kickoff article of a series on the 2008 election I'll be writing exclusively for RealMoney. If the current election is anything like the last two presidential elections, there will be plenty of excitement for political junkies, and there is much at stake for investors.
I am a longtime consumer and critic of election coverage related to the markets. Past media coverage has overemphasized the journalistic, horse-race aspects of the election. In 2004, causal relationships were loosely asserted, with little supporting evidence. I am delighted to have the opportunity to make RealMoney a source for more authoritative information about the linkage between elections and markets. I hope for plenty of help from interested readers and colleagues on the site.
The 2008 election is important to all investors, although they may not yet realize it. The potential for policy change is much greater than usual, with consequences for the overall markets as well as for many specific sectors and stocks.
As candidates clarify issue positions, we will have a better idea of the stocks and sectors where the effects are the greatest. The following sectors and stocks present a few good examples:
But these topics and these stocks just scratch the surface. Each candidate is different.
Investor Beware
U.S. stock investors have good reason to keep a close eye on this election, because there is plenty of reason to be worried.
1.) It could be the end of a very market-friendly era. Economic policy has been supportive of markets through the entire Bush administration. Some would argue that Bill Clinton's policies were also good for the market, so from this perspective, the election could mark the end of a long-term trend.
2.) Democrats have the early lead. Prediction markets show them with a 55% chance of taking the White House, while the GOP is trading at about 41%. The prospects for legislative control are even greater, with the Democrats showing about an 80% chance in each house of Congress. Various head-to-head polls are less favorable to Democrats but show interesting results. Some of the best Web sites show creative analyses of factors influencing the primaries in both parties. This is important for evaluating head-to-head data.
At the time of publication, Miller had no positions in stocks mentioned, although positions may change at any time. Jeffrey Miller is president and CEO of NewArc Investments, a registered investment advisor, and Capital Markets Research. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Miller appreciates your feedback; click here to send him an email.
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