Tags: election | themes | investment | decisions

20 Key Investment Themes in Election Season

20 Key Investment Themes in Election Season

(Valiantsin Korznikau/Dreamstime)

By Sunday, 11 October 2020 01:06 PM Current | Bio | Archive

In this election season, there are many key themes in the major financial news magazines such as: Newsmax, Investor’s Business Daily, Barron’s, The Financial Times and The Wall Street Journal.

During these fast-moving times, key economic shifts have boosted many industry sectors while other sectors have been hit hard in the short term.

Here are 20 points to review and consider before investing in or buying or selling securities.

  1. New COVID Treatments: Treatments such as the Regeneron (REGN) Treatment that President Trump received could be a game changer boosting economic activity and reducing fear globally. REGN-COV2 is a combination of two monoclonal antibodies (REGN10933 and REGN10987) and was designed specifically to block infectivity of SARS-CoV-2, the virus that causes COVID-19.
  2. COVID Vaccine: Any effective vaccine could actually lift the U.S. and the world from its shutdowns.
  3. Taxes: Taxes could change if Trump is not reelected, thus affecting your portfolio and the costs of selling stocks or funds. Next year, if Biden is elected, selling a fund, stock, bond, REIT, BDC or other security could create higher tax consequences.
  4. Mergers in the Financial World: Mergers of money management companies are in the spotlight. Ben Franklin bought Legg Mason. Invesco (IVZ) and Janus (JHG) are in play. Eaton Vance (EV) is being bought by Morgan Stanley.
  5. Banks: Regional Banks may have some resilience even with a market going down. Many of these banks are down 30-40% already and pay nice dividends. Thus, they may be a safe haven.
  6. China and India Defensive? China and India are seen by some analyst as offensive investment plays during this election season. Some are suggesting buying funds or options going out a few months based on the lows in India and China and the upside potential. See: (BABA) (JD) Some are also looking at Brazil for upside. For example, look at some China or India stocks or funds and see if they are at 3-year lows. There may be value.
  7. Hedge Your Bets: Leverage! Don’t forget that there are ETFs that are leveraged Bull and Bear BRIC positions for Brazil (BRZU), China (YINN), India (INDL) and Russia (RUSL). But these are aggressive and not for the average investor.
  8. Vaccine Approvals Offshore: China and Russia have approved vaccines without waiting for the results of Phase 3 trials. This could boost GDP offshore in China, India and Russia and South Asia.
  9. Investment Banking: Some investment banks such as Goldman (GS) are seen as reasonably good investments based on projected earnings some banks have profits from investment banking, trading and IPOs.
  10. Market Breadth Rising: The breadth of the market is moving up on some days when the market is going down. This could be attributed to Blue Chips and value stocks being bought as a defensive play with upside. Mid caps and small caps may also benefit.
  11. Tech to Value Blue Chips: Many money managers are suggesting that clients take some profits in technology. As with 1999-2000, the S&P could be seen as over weighted with several key tech stocks including: Facebook, Apple, Amazon, Netflix, Google etc.
  12. Potential Stimulus: Stimulus money is coming from the President, but nobody is sure how much Congress will approve. This anticipated influx of cash is supporting the markets. The NASDAQ stock market presently is over 100% higher than in Obama’s last year of office.
  13. Travel Industry: The airline, hotel, and travel industry has really been beat up. They could carry forward losses for years, benefit from low costs of oil, while accepting government stimulus. The upside is considerable if treatments and vaccines continue to be successful on a global scale.
  14. Earnings Positive: Earnings have been better than expected for many stocks. Certainly, many companies have benefited from online sales. For others, it may have been the PPP or state stimulus cash floating their stock price or taking state and federal tax losses that boost profits.
  15. Telecommuting Stocks: Most importantly, telecommuting and outsourcing stocks are booming. Anything related to working from home, internet productivity, or hiring independent contractors seems to be reaping profits.
  16. Tax Buzz Killer: The biggest buzz killing proposition is if a new administration raises corporate taxes. If corporate taxes are jacked up, the price of stocks will fall and so will the cash benefits to stakeholders including: employees, the communities, customers, and even investors in the form of a company’s ability to pay dividends to retirees.
  17. Buy What You Use: If there is something that you are using everyday whether it is Verizon, Apple, a Utility stock, an online tool for work, or some online service such as Amazon, then maybe you should buy that stock if it is traded. In sum, buy stocks in companies or brands that you know!
  18. Inner City Losses: Many high tax, big cities are losing companies, executives and thousands of employees who are now allowed to leave the city and telecommute. There is money to be made in the suburbs and smaller cities again. Target cities that have great public schools.
  19. Energy: The cost of gas and oil is cheap which boosts profits for any fuel dependent businesses. The national average price for a gallon of regular gasoline was $2.18 this week. The average weekly regular retail price during the Obama administration was almost 50% higher — about $2.97 per gallon
  20. Interest Rates and Mortgage Rates: Low interest rates will continue to fuel a cheaper cost of doing business and low-cost borrowing. Mortgage rates have hit an all-time low in recent history. Some loans are as low as 3.1%. The value of homes outside of big cities may have moved up a bit.

Money is like water, and it flows where there is the least resistance. If a new government in the U.S. raises taxes, we may see a transfer of global investment into the BRIC nations of Brazil, Russia, India and China along with Korea, Singapore, the UAE and other tax friendly nations.

The worst consequence of higher taxes is a loss of investment and a loss of domestic business activity that would create jobs. With all of the uncertainty over the last 20 years, the only certainty we have right now for working families is tax rates and interest rates, but that could be changed if new people come to power.

As for election sentiment during a global pandemic, Newsweek came out with a poll this week where a majority of people said they were better off under President Donald Trump than when either Barack Obama or George W. Bush when they sought reelection. Only time will tell what happens with elections, but investor money will most certainly continue to flow into the global stock markets.

George Mentz JD MBA CWM Chartered Wealth Manager ® is a licensed attorney and CEO of GAFM ® global education, which is an ISO 29990 Certified professional development company operating in over 50 nations. Mentz is an award-winning author and advisory board member to several companies around the world in education, charities, and FinTech Companies.

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GeorgeMentz
Money is like water, and it flows where there is the least resistance.
election, themes, investment, decisions
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2020-06-11
Sunday, 11 October 2020 01:06 PM
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