The temptation is there. You can't deny it. A little voice inside of each of us, at least the sentient thinkers among us, wants to leave the office and head out into the streets to watch the freak show in action. Oh, the weirdos will be out and about, and regardless of whatever side you lean toward politically, your side has plenty of them. I promise. Now, from my perspective... I would much rather write about baseball or college football today. Maybe read a good history book. However, the only time anyone ever listens to my opinion, is when I write about business or economics. It is with that in mind, and with the understanding that the only thing possibly more difficult than forecasting this election, is trying to play this election through equity performance, that I make this effort.
Sarge's Best Bets:
Republicans keep control... Lockheed Martin
One has to think that the president's agenda will be strengthened in the event of a red wave. Does that play into a quicker resolution to the trade dispute with China, or drag it on forever? That's a tough questions to answer. I almost went with the most exposed names to China for this reason. Better stay away from the semiconductor space for that reason though as the uncertainty is obvious. How about defense and aerospace? Tough sector. Don't I know it? I am long most of these names, and have had to become creative in order to manage the risk associated. It is easy to see cause for a rebound across the space in the event of a red wave as a certain shade of blue has already been priced in. Anything else would cast doubt on the upward trajectory planned for defense spending.
My thought is that with a Republican win, an investor could choose from among Lockheed Martin (LMT - Get Report) , Raytheon (RTN - Get Report) , and Northrop Grumman (NOC - Get Report) without worrying about picking the wrong name. However, outside of politics, hypersonic weaponry is the future, and both Russia and China are ahead of us there. Lockheed Martin is believed to be the furthest along in developing this space, and therefore is my pick... sort of as a hedged play.
Democrats sweep the legislature... Amazon
Not only has the president recently take to discussing the idea of placing antitrust hurdles in front of Amazon (AMZN - Get Report) , CEO Jeff Bezos also owns the Washington Post, a newspaper that has regularly opposed the president on many issues. Do the other FANGs benefit as much as Amazon from a blue wave? I don't think so. I think that social media sites such as Facebook (FB - Get Report) are likely headed for considerably higher levels of regulation regardless of who comes out of today's election in better shape. Alphabet (GOOGL - Get Report) has not made friends on either side of the aisle by playing ball with the idea of overt censorship on behalf of communist China, not to mention the firm's other high profile issues. There is another name out there that could also benefit in the event of democratic control, a green planet type name... Tesla (TSLA - Get Report) . Close call, but I think Amazon is my top pick.
Gridlocked Outcome... United Rentals
United Rentals (URI - Get Report) . Tough choice, because I feel that a whole slew of names might benefit from a situation where each party controls one house of the legislature. However, this president is not in any way... an ideologue. President Trump is a populist. In my opinion, that makes him more likely to adapt to a changed situation, and thus much more likely than many think to play ball where compromises might be made. Remember, the man is nearly a life-long Democrat, who ran as Republican, because he thought that was the clearer path to a nomination. There is no long-term party association there.
The president loves to build. Both parties love to spend, preferably if it can be paid for, but that's never stopped anyone. If this nation ever sees a deal on a large infrastructure deal.... gridlock is the way that gets done, and everyone claims victory. You could also go with Caterpiller (CAT - Get Report) , Vulcan Materials (VMC - Get Report) , or U.S. Concrete (USCR - Get Report) to play this theme.
Now, It's Up To You
Three doors. Three paths toward adapting to possibly changed environments. Easy? Never is. That said, the choice is yours. If you vote and your side wins, congratulations. If you vote, and your side loses, your family still loves you. If you don't vote... I don't want to hear a peep out of you.