While year to date, the markets are up, most market analysts believe the next few months through the election will be a rollercoaster ride because the 2012 election has the potential to influence the market in many ways. We have potential changes in health care, financial regulatory environments, and taxes. Nearly everything that affects the economy will be influenced by the election.
For investors, safe places during political uncertainty have often been Consumer Staples, which we still believe to be a good investment, Utilities, which generally pay a strong dividend, and the Healthcare sector. In the past, the Healthcare sector has offered both growth and stability, but now that it is a hotly contested issue, Healthcare stocks are a mixed bag. With the new health care laws, we believe that there will be companies that benefit. Insurers will likely see higher revenues; however, they may also see lower margins. Hospitals will likely see more business as more Americans will have insurance. Likewise, drug companies may benefit from an increased customer base.
The Energy sector would likely benefit more from a Republican win. The GOP is more interested in traditional forms of energy, including offshore drilling, pipelines and our nation’s coal. Oil and energy exploration services would likely benefit. A Democratic win would likely affect environmental policy. One of the main environmental issues surrounds the practice of fracking, the practice of pumping fluids into the ground to increase pressure that would cause cracks in the rock layer, thus releasing the natural gas supply. Currently, we have a surplus of natural gas and prices are cheap. Increased environmental regulations could change the natural gas industry.
Defense is another area that would likely suffer cuts with a Democratic win, which will likely affect the Industrial and Technology companies with defense exposure. Defense is already looking at $55 billion in cuts as we approach the fiscal cliff.
A Republican win would likely help the banks in the Financial sector. Many financials have been beaten down in recent years, but banks have yet to see a comeback. Under a GOP administration, banks may have an easier time and would likely see some growth.
Despite the many market sectors that the elections promise to affect, many investors are left wondering why the market is currently doing so well. It comes back to the economy and the growth we have. We are undoubtedly missing a few key growth indicators, namely inflation and low unemployment. However, we are beginning to see improvements in employment rates. Many of the indicators show we are poised for growth. We believe it is the uncertainty that is holding the economy back. Once there is a decision, we believe the markets will begin to move.
At Henssler Financial we believe you should Live Ready, which includes staying diversified in your investments. If you have questions regarding defensive financial positions, experts at Henssler Financial will be glad to help. You may call us at 770-429-9166 or email at experts@henssler.com.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
