If Obama Wins, Buy IT, Telecom, Sell Materials, Healthcare; If Romey: Buy Staples, Healthcare, Fins, Sell Materials

Tyler Durden's picture

While the much anticipated ramp into the elections has so far failed to materialize (confirming yet another "technical pattern" of the New Normal, namely that whatever most expect to happen, never happens), it is time to consider what impact a given administration - either Republican or Democrat - would have on the stock market. Fiscal cliff aside, whose overcoming will be very problematic in either case and will likely necessitate a market plunge a la August 2011 to be fully implemented, although more likely if Romney wins the presidency or there is a Democratic sweep, both outcomes which according to popular conventional wisdom and various online polling services have a less than 50% chance of occurring, it turns out that at the macro level there is absolutely no difference for the market whether the president is a republican or a democrat for stock returns one year after the election. As Goldman observes: "Since 1976, the S&P 500 has offered approximately 10% total returns in the twelve months following a presidential election, regardless of which party wins that election. Performance is also very similar over shorter three and six month windows. However, median returns are slightly better early in Republican administrations, while during an entire four year term the equity market has somewhat higher returns under Democrats." In other words, those who are unsure if to invest in the broad market based on who wins, should not have the party affiliation of the winner as a consideration, at least not as a key issue. Where there are, however, nuances is at the sector level, which is where those seeing to generate "presidential beta" should consider trading on.

Alternatively, those following alternative measures of election forecasting can look at the relative performance of these sectors over the next 2 weeks to see which way the market is voting, and how much it differs from the "forecasts" of political hacks, all of which are partisan and seek to derive  reflexive behavioral outcome whereby the gullible voters are driven by what they "see" are certain outcomes, or from InTrade's largely meaningless, flash smashing and manipulated predictions (just recall what InTrade said on Obamacare...).

Here is how Goldman's David Kostin explains it:

At the sector level, politics - and possibly policies - matter more. Over the past 35 years, Democratic terms are associated with the outperformance of cyclical stocks while more defensive and higher yielding sectors have outperformed during Republican presidencies. One year after a Republican president is elected, Consumer Staples, Health Care and Financials have generally outperformed the S&P 500 while Materials and Tech have lagged. Following Democratic victories, Information Technology and Telecom stocks have led the market while Materials and Health Care have fallen off the pace.


The past four years have largely followed suit with Consumer Discretionary and Information Technology shares outperforming the market since Election Day 2008. Meanwhile, Financials, Energy, and Utilities stocks have lagged the market, with all three impacted by regulatory issues to varying degrees. In contrast, Health Care has outperformed the S&P 500 by about 700 bp.

In other words, create an Index with a pair trade of long Consumer Staples, Health Care and Financials and short Materials and Tech vs another Index long IT and Telecom and short Materials and Health Care, and starting today keep track of how they perform over the next 10 or so days to gauge what the real vote is: that of the market.

Visually, here is why the general market is broadly agnostic to who wins:

How various indices perform under either administration:

And a focused drilldown of the winning and losing sectors under Democrats...

And Republicans.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
thegreatsatan's picture

Clinton being president during the internet boom skews this horribly for the info tech sector. 

tsx500's picture

...........and , no matter WHO wins , this country is still SCREWED 

vast-dom's picture

Here's how to play this GAME PONZI PLANET: do your due diligence, run you analysis, figure out the fundamentals and then pick your positions, randomly take 70% of said positions and do the exact opposite, the remaining 30% do as you calculated and after you have placed your BETS you DO NOT VOTE.

Popo's picture

I say we shit the bed after Nov 6th no matter who wins.  We're on artificial life-support as it is.   The "switch" will get turned off after the election.

DoChenRollingBearing's picture

Well, I would prefer to buy gold (and maybe a bike) no matter who wins.  Whoever, Fringe Blogger Bearing will still be at it.  In the meantime (and after the election) you can always drop by to see who (and from where) has visited...



AldousHuxley's picture

Democrats = Liberals = NEW Money.....technology, entertainment, alternative energy subsidies, venture capital, internet media, small cap businesses

Replublicans = Conservatives = OLD Money.....military, farm subsidies, investment banking, oil, print/TV media, fortune 500


It is all about the money.

It is about time old guard give a way to new generation of American businesses.

Let bigAuto, Megabanks, bigoil, biglaw compete without government subsidies.

Clashfan's picture

Old money votes Dem more often than new; new money votes Rep more often than old. You have that part backwards.

Clashfan's picture

And really old money plays both sides. Define foundation. Define oligarchy.

DaveyJones's picture

old and new are irrelevant. It's all dirty. That's the problem

BeaverFever's picture

Lets get this straight. It's the Red team vs the Blue team. Both teams are controlled by the same owners but the spectators just don't get the facade.

In the end only the words on the TelePrompTer change, illusionary charts are altered to purport change - and on top of this we are supposed to educate ourselves on how to profit from an already rigged market?

FireBrander's picture

My money was on Obama for the win! Then I noticed Bill Clinton was out, heavily, stumping for Obama; so I'm rethinking my bets...


Clinton is the MASTER at getting himself elected, but he's the kiss of death for anyone he "tries to help"; and sometimes that death part is literal...


If I was Obama, I'd tell Bill "Thanks, But no Thanks!".


PS> Clinton Stumping for Obama is akin to the Bushwhacker stumping for Romney. Anyone seen Bush? Why no pics of Romney shaking hands with Bush and receiving the mighty G's endorsement?


Hmmmm....Could it be?


And more interestingly, why is the Obama campaign doing ZERO to tie Romney to Bush?

Grill Boss's picture

Health and Telecom go hand in hand, Telecoms and microwave radiation make people sick, and Health makes the profit... genius...



schatzi's picture

Goldman can shove their nuances up their arse. Fiscal cliff, collapsing Europe, stalling Asia and failing corporate earnings means high downward correlation for all stocks.

toady's picture


Wait..... What?



JustObserving's picture

Again applying logic to US "markets" is just a waste of time and logic.  The Fed will soon be buying stocks like Japan.  They are already buying 77% of Treasuries.  They are running out of stuff to buy - so they will buy stocks soon enough.  So you are safe buying virtually any stock  - Uncle Bernanke has your back.

US markets are Ponzi schemes backed by the Fed.  Unlike every other Ponzi scheme, the Fed has an infinite supply of fiat.

FireBrander's picture

So you are safe buying virtually any stock


"any stock"? The Feb will save FacePlant?


I can see the Fed buying stocks, but it will only be the "Too important to fail stocks". Maybe Bank Of America will be sacraficed; but after that one beheading, the Fed will be given the green light to "save the system" by snapping up the stocks of all the other big banks to ensure they're "well capitalized".


tooriskytoinvest's picture

Sandy forecast to hit N.Y. area by Monday


How Hurricane Sandy
could jolt energy markets


Recession Very Possible in Q1 of 2013: Investors And CEOs Are Getting Very Nervous With Cloud Of Uncertainty, The Announcements of Layoffs Are Coming Fast and Furious, And We All Start Feeling The Economy Is Decelerating!


WHITE HOUSE CONFIRMS: OBAMA Arranged For Muslim Brotherhood To Kidnap Ambassador Stevens For Prisoner Trade – Killed Him Instead!!


$80 Billion Worth Of American Property Is In Hurricane Sandy's Path



I am Jobe's picture

Who fucking cares about E Coast. Full of aholes and rats.

tsx500's picture

You've got DC covered , now what about the REST of the E coast ?!

Cult_of_Reason's picture

Either Obama or Romney win means sell materials.

toady's picture

I guess I don't understand the materials label. I'm buying materials like crazy. Ammo, food, generators. I even have a line on a pre-fab house (just add nails)

Buying any materials of value before the fiat is worthless.

toady's picture

Yes, I suppose I should have known it was paper, or even worse, digital, materials.

Maybe if paper materials are down real materials may be down too...

dark pools of soros's picture

another horseshit post..  wtf


just list the top 30 donors on each side and we can place our bets accordingly


earleflorida's picture

and is this horseshit also...

ie., "Corporate Tax Dodger" is where the gratuity begins?


and here:     http://www.blogs.suntimes.com/sweet/2011/03/ten_giant_us_companies_avoid...

thankyou tyler

Ps. as ZeroHedge has shown in recent post regarding the QEinfinity conundrum-dysfunction. we are in a stealth depression, massaged by 'snap's & indefinite unemployment, thusly sandwiched by unrealistic entitlement programs! indeed, concurrently absorbing the middle class through obscene gov't regulation at a frenetic pace... having decimated the lower working class long ago via anti-sba!


Atomizer's picture

If Obama wins, he will not serve out his next four years. The documents have already been drafted, awaiting to be executed. The Obamagate process is already underway. His voting base no longer matters.


  1. If he wins, he loses.
  2. If he loses, he still loses.
DoChenRollingBearing's picture

+ 1  


But, that assumes Congress gives a crap and that more people start following something other than CNN, who until Friday had nothing on Benghazigate at their home page.

JR's picture

“…it turns out that at the macro level there is absolutely no difference for the market whether the president is a republican or a democrat for stock returns one year after the election.” –Tyler Durden

Why would Americans expect any substantial changes in markets or government policy when their only real contribution to liberty is to vote?

America is no longer owned by Americans and until they refuse to take it back, they must settle for what the real owners of the nation have in store for them.

“Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it.” – Thomas Paine: The American Crisis, NO. 4, 1777

Criticism of the two-party system has now reached an all-time high; but where was the opposition to major developments in America’s history that led to this loss of representative government?

Where were the powerful voices to oppose direct election of senators, eliminating the influence of “sovereign” states?

Where was the opposition to the major changes in immigration policy that switched preferences for skilled immigrants to Third-World open borders?

Where was the opposition when measure after measure removed any restrictions on who was eligible to vote, including the latest: no picture ID required?

Where was nationwide opposition to turning American custody of the currency over to a secret private bank which then used that currency to redesign the political system, including limits on any effective challenges to the two-party system?

Where is today’s opposition to undeclared war, to secret surveillance and even assassination of American citizens to state invasions of privacy from searches at transportation hubs, and spying from drones and through cyberspace?

And, now, where is the opposition to turning America’s foreign policy, and security, over to a foreign power because of that foreign power’s influence on the media and government-controlled schools and, as demonstrated in the presidential debates, the two-party system?

"Voting is no substitute for the eternal vigilance that every friend of freedom must demonstrate towards government.   If our freedom is to survive, Americans must become far better informed of the dangers from Washington -- regardless of who wins the Presidency." -- James Bovard in Voting is Overrated

Yen Cross's picture

 Good read J.R.

   My best to Sue Ellen.

       You probably/already, caught this article ; http://www.humanevents.com/2012/10/26/is-voter-fraud-being-committed-in-...

JR's picture

Wow! No, I hadn't, Yen. Thanks!

Is the Pope Catholic?

As for Sue Ellen, getting wrinkled!

Yen Cross's picture

 The Pope is a closet , " Alchemist" ...   

    Adiós to Sue Ellen

spooz's picture

Contradictory advice.  First Kostin says that following Democratic victories , health care has "fallen off the pace".  Then, in the next paragraph, he says in the last four years (following a Democratic victory) Health Care has outperformed the S&P 500 by about 700 bp. Could it be that the lines between D & R have blurred and Obama is as much a crony capitalist as Romney? (rhetorical)


JR's picture

No major legislation moves through the Congress and is signed by a president without the fascist money cartel using it for their own benefit. And healthcare is a prime example.

With so-called government “care”  American healthcare will atrophy and soaring profits will be extracted from the people to flow into the coffers of the Monetary Fascists – i.e., the international financial industry.

This cheerleading on both sides just helps to design the legislation to fit what the elites want.

It’s called Monetary Fascism, “a hyper extractive model…that creates Third World Countries and Banana Republics” masquerading under the moniker “free market capitalism,” as explained by James C. Kennedy in The Dark Age of Money:

“Milton Friedman’s collective works constitute the foundation of Monetary Fascism” and is “a system where financial interests control the State for the advancement of the financial class…free to extract the wealth of any corporation or Nation without any reciprocal obligations,”  using “the State to put the interest of money and the financial class above and beyond all other forms of industry (and other stake holders) and the state itself.

“The foundation of Friedman’s corrupting principle is that the investor (money to be more precise) has no duty, obligation or covenant to anyone or anything.

Writes Kennedy:

 “Friedman does not differentiate between some third world country and his own.  The ultimate difference is that Friedman has created a model that sanctions and promotes the exploitation of his own country, in fact every country, for the benefit of the investor, money, the uber-wealthy.  He dressed up this noxious ideology as ‘free market capitalism’ and then convinced most of the world to embrace it as their economic salvation.”

As a result, in America “whole industries have long ago disappeared. Friedman’s Monetary Fascism has burnt through most of what remains of the middle class.  Seeking fuel, the fire has spread to the upper middle class and the lower middle class. Small businesses and Unions are consumed in the flame.  Even the ranks of the finance industry were offered up to the god of money.  Tens of thousands of recently dispossessed upper middle class and the lower ranks of the wealthy find themselves without meaningful work and dark prospects…

“The only rational defense is for people everywhere to denounce Friedman’s ideology in all public policy debates and academia, and to articulate the true principles of Adam Smith.

”Ending the tyranny of Monetary Fascism begins with the wide spread recognition that it is the anti-theses of capitalism, free markets, individual self-determination and national sovereignty.  However, it is truly unstoppable as long as the world continues to view it as the embodiment of Adam Smith’s ‘free market capitalism.’

“Until then, the plunder (such as off-shoring without comparative advantage, tax avoidance, deep influence over government policy, replacement of traditional capital formation with financial schemes...) will continue..."


Monedas's picture

The differences between the parties gets blurred because they have to work together !  Like Coke and Pepsi .... they have to work the bell curve ! That's not an inditement .... we just have to move the bell curve with education !

DoChenRollingBearing's picture

"Education" in old American-ese (or would that be "American citizenism blobbing up", help me out here AnAnonymous!) makes two assumptions that are no longer true:

1) That the system really wants to teach learning and critical thinking.

2) That students really want to learn anything worthwhile.

Monedas!  SQUEEZE that bell-curve to the left, LOL!

Rainman's picture

Throw out the rear view mirror. Focus on the central banks and the inevitable Eurocollapse. 

vrabobabo's picture

buy Slovenian  blue chips, government needs money

Trimmed Hedge's picture

If "Romey" wins, we should buy SPLS..??

Schmuck Raker's picture

Right, BUY Materials, SELL Romney, SELL Obama.

Got it, thanks.

Monedas's picture

No more fatherless child POTUSes like Clinton, Obama !  They are not well rounded people .... they share their pain by inflicting pain .... like all Socialists !    Did Carter have a good relationship with his father .... or was he just a feckless fool ?   Speaking of Carter .... did you see him at the truce negotiations in Syria .... the truce never happened .... fantasy, just like the crooked elections he gives his blessing to !   He will spend the rest of his life trying to dig his way out of his reputation's hole .... but he only digs in deeper !    Is there a Nobel prize for pathetic fools who hurt humanity ? Yes, it's called the Peace Prize !      I'm really beginning to despise Bill and Hillary  .... and some of you say there is no difference between the parties ?

DoChenRollingBearing's picture

Shillary had her chance to redeem herself a few days ago re Benghazigate.  Now we have a cover-up on a scale not seen since Nixon.  But, NO ONE died during Watergate.

And JUST WHO DID make the decision(s) NOT to send in reinforcements when asked twice by the Consulate and twice by the CIA annex when they came under attack.  One of the CIA guys even had the Al-Qaeda mortar lit up by laser, yet no one came to take it out.

But, let's see if they cover this one up, make it go away.  This will be ONE GREAT LESSON that America can learn from if so.  It would prove that the State Run Media is the right characterization for them, along with a BIG DOSE of Congressional hypocrisy!


Oh, and while we're at it, since the world does not like Americans soldiers in their countries, let's just do what Ron Paul has always suggested: bring 'em home!

Trimmed Hedge's picture

The Clintons always sure have a lot of blood on their hands, don't they....

Clashfan's picture

And Rob-me's got a lot of presidential blood in his lineage. Surprise, surprise. It's an oligarchy: http://blogs.ancestry.com/cm/2012/10/16/you-wont-believe-who-romneys-rel...

Clashfan's picture

Not seen since Nixon? Are you forgetting 911? That one outdid Nixon by miles.

WhiteChrist's picture

'Tis no stuff who winneth the cire for those that wit what inn to take their eeth in: AAPL. Nowadays, most foremen of mickle groundfests hedge by gesting at this iGesthouse: AAPL. Bear the Lord's teachings in mind: the heaven is no endmark for the midbank-blessed tree. A share of AAPL a day keepeth the cheapings' leech away. Many a little maketh a mickle, many a mickle an iMuckle. What the Borough and the Street do ought be good enough for thee, for they are ownings of the Lord. Unthink of thy needs and buy, as AAPL is only at ten times its earings. In tide, its earnings will be unbounded. Blessed be His iMains that be.

Behold, there is no Christ but White Christ, and man is His foe. I am not He, nor is any man, but His thane will I be, and His will do. So shouldst thou, as thou hast naught to say in this. May we have no self or freedom, and may we never think.

centerline's picture

In Llyod's name we prey, Amen.

francis_sawyer's picture

What a load of horseshit...

Freewheelin Franklin's picture

This assumes that anyone even wants to invest in US markets.