Tags: forbes | invest | election | stock market

Forbes.com: 5 Investing Tactics for Rest of Election Year

Image: Forbes.com: 5 Investing Tactics for Rest of Election Year

By    |   Friday, 27 May 2016 10:34 AM


While the biggest question of this presidential election year (who wins the White House) has yet to be answered, some stability should return to the stock market from now until November 8.

“U.S. stocks swamp foreign ones in the back half of presidential election years,” Forbes.com contributor Ken Fisher explains. “You should love that no one has heard this–meaning it isn’t now discounted into pricing and thus remains a good bet,” he said.

“Within the S&P 500′s history (starting 1926), when measured against the foreign-based, the U.S. has come out ahead 82% of those second-half election cycles–on average by 6.5% per year,” he said.

“Stocks love falling uncertainty. Election years begin gushing disquiet–never more true than this year. But our political dithering normalizes as the cycle moves on–helping U.S. stocks relatively regardless of who wins,” he said.

“You can game this while also avoiding the market’s overall direction. First, buy the Schwab U.S. Broad Market ETF. It’s an ultracheap (costing three one-hundredths of 1% per year) passive replica of America’s 2,500 largest stocks. Then, sell short the same dollar value of the iShares MSCI EAFE ETF – your foreign passive piece. The two together render you the U.S.-versus-foreign spread.”

Never be U.S. only. Merely overweight now; underweight other times. Huge, extreme bets are always wrong unless you think you’re a genius. (If you think that, you’re likely a fool.) Always have some counterbet in case your primary bet, no matter how well conceived, gets skewered. The best bets can go haywire.

He also offered specific stock picks for such a strategy, 3 of his highlights:
  • Apple: "Later-stage bull markets typically take to consumer discretionary and technology. Apple oozes both," he said.
  • Colgate-Palmolive: "Quality earnings and brilliant brands, plus it’s postured for emerging realms, stock buybacks and lousier competition," he said.
  • Germany’s Fresenius: "My best single slice of non-U.S. diversified health care–spanning services, supplies, equipment, generic drugs and hospitals in roughly 100 countries (and it owns 31% of Fresenius Medical Care)," he said.
Other financial experts have said that in the long run, it really won't matter who wins the White House.

For one, Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc, has said a Donald Trump presidency wouldn’t be the blow to U.S. business that some fear, Bloomberg reported.

“If either Donald Trump or Hillary Clinton becomes president, and one of them is very likely to be, I think Berkshire will continue to do fine,” Buffett, 85, said at the company’s annual shareholders meeting in Omaha, Nebraska.

The outcome of November’s presidential election is unlikely to change the fact that the U.S. is a “remarkably attractive place in which to conduct a business,” said Buffett, who endorsed Democrat Clinton at an Omaha rally in December. U.S. companies have enjoyed “terrific” returns on equity despite a sustained period of ultra-low interest rates, he added.

Buffett, who has criticized Trump in the past and scorned politicians’ pessimism about the country, looked past the current voter angst for a longer view of U.S. economic prospects.

‘Far More’

“Twenty years from now, there’ll be far more output per capita in the United States in real terms than there is now. In 50 years, it’ll be far more,” Buffett said. “No presidential candidate or president is going to end that. They can shape it in ways that are good or bad, but they can’t end it.”

Asked how a Trump presidency might affect Berkshire’s business, Buffett replied, “That won’t be the main problem.” He didn’t elaborate.

(Newsmax wire services contributed to this report).

© 2017 Newsmax Finance. All rights reserved.

   
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While the biggest question of this presidential election year (who wins the White House) has yet to be answered, some stability should return to the stock market from now until November 8.
forbes, invest, election, stock market
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2016-34-27
Friday, 27 May 2016 10:34 AM
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