Coming Week: And the Winner Is...

Two words are on the mind of every investor looking toward another week in this turbulent stock market: Obama and McCain.

With most major companies' earnings out of the way, and the market already discounting weak economic reports, the elections will be the primary focus next week.

Should the Democratic nominee, Illinois Sen. Barack Obama, win, Wall Street will be anticipating higher taxes on businesses and the wealthy. Republican nominee Sen. John McCain of Arizona, meanwhile, wants to lower the capital gains tax and make permanent President Bush's tax cuts for the rich. In recent weeks, most polls have shown Obama with the lead.

Greg Womack, a financial planner and president of Womack Investment Advisers, predicts that only an unexpected turn of events will have a major effect on prices.

"The markets have already factored in an Obama victory at this point," Womack notes. "What would significantly move the markets to the upside would be a McCain surprise -- a come-from-behind win or if the Republicans could pull off winning the majority seats in Congress or the Senate."

On the other hand, research by John Dorfman, portfolio manager of the Dorfman Value Fund, shows that, after an election, the market has generally responded positively in the past 15 election years, regardless of which party wins. The past 15 election-year Novembers had an average return of 14.5%, with eight posting positive returns, and seven turning negative.

December is even brighter, with 16.2% gains on average. Twelve of the months had gains and three declined. The results "very slightly" favor Democrats, says Dorfman, but there is ultimately little difference in who wins.