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The stock market often overreacts to electoral results, creating opportunities for investors who ignore the promises of the winning party and keep their eyes on earnings fundamentals.


Barack Obama

on Tuesday easily defeated Republican John McCain and is poised to be sworn in as the 44th U.S. president on Jan. 20.

Stock market

futures traded lower Wednesday, but the reaction did not necessarily constitute a reaction to the presidential race, as investors took profits after a rally on Tuesday and reacted to weak earnings reports.

Threats of heavy regulation for some industries or promised big incentives for others tend to get watered down as they make their way through the legislative process. Politicians like the spotlight; they want to inspire us, but when it comes to actually doing something, they tend to get bogged down by pesky little problems like democracy.

"You've had situations like in the 1960s where President Kennedy got up and jawboned the steel industry and the stocks of the steel companies collapsed," recalls Mario Gabelli, Chairman and CEO of GAMCO Investors, which oversees about $28 billion in assets.

Kennedy won that standoff and regulation increased, but labor issues played a much more important role in shaping the industry in the 1960s, according to Jonathan Rees, a history professor at Colorado State University-Pueblo, who has written extensively about the U.S. manufacturing industry. In fact, regulation has meant relatively little for U.S. heavy industry in general since World War II, Rees argues, and he doesn't see that trend changing anytime soon.

"There are much broader historical trends out of large smokestack industries, for lack of a better term, that are going to have much more to do with what happens in the future than anything that the next president might do," he says.

Health care investors got all aflutter when Bill Clinton took office in 1992. Stocks of drug companies like


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(MRK) - Get Merck & Company Inc. Report

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got hammered for two years.

But then the Clinton health care plan failed and stocks of drug companies began a long, prosperous run that lasted until around 2000, when they took a beating from lawsuits, generics and health maintenance organizations. It is a funny coincidence, but probably nothing more, that drug company stocks started falling again just as George W. Bush took office.

Stocks are suffering so badly from the credit crisis during this presidential election than it's hard to say whether the prospects of a strongly Democratic Congress and a Barack Obama presidency had much of an effect.

"If you'd asked me a year ago, I'd say if Obama looks like he's winning, the markets will go down in the beginning and then go up after he's elected because they'll already have discounted his victory, and with McCain the markets would go up and then they'd go down after his election, but in the last 90 days those have been total sidebars," Gabelli says.

One clear target of Democratic ire is the HMO industry, but much of the battering companies like


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have taken in 2008 has been for other reasons, says Tom Carroll, analyst at Stifel Nicolaus.

Carroll says underwriting mistakes have led to a handful of major earnings revisions by managed care companies. There have also been concerns, most of them overblown, about the financial portfolios of the health insurers. Still, he believes some degree of pessimism about expected regulations is baked into current share prices.

This pessimism is particularly acute for


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. Humana gets 85% of its revenues from Medicare, so its margins would be particularly vulnerable to government intervention. However, Carroll believes a growing population should boost business to offset the expected hit to margins. He doesn't have a buy on Humana because he thinks the election could cause it to trade down further. He's preparing to shift that view though once he's convinced the focus is off the election.

"I'm predisposed to being positive on Humana" Carroll says.

Many issues have yet to come into focus. Gabelli believes one potentially important factor will be the next chairman of the Federal Communications Commission. "I don't think the market has discounted or even focused on that issue," he says.

When it does, it might not be a bad idea to find out which media companies are selling off as the new FCC chief makes threatening pronouncements.

And buy them.