Contrary to popular belief, the victory of a particular party does not usually have as much an effect on stocks as the election itself. Bob Doll of Nuveen told Barrons that stocks rise an average of 16% following elections regardless of which party has the majority. The reason for this is that one thing the stock market hates in uncertainty, and once the unknowns are resolved through an election, stocks tend to go higher.
However, whether the Republicans or the Democrats win might have an effect on which stocks may be worth buying, even though this may be due more to perception than reality. The New York Times and ESPN estimate the Republicans have a 66% chance of taking over the Senate, thus giving them control over both the House and the Senate. While this is more likely to result in gridlock than policy, Doll would buy defense stocks, banks and companies that benefit from pipelines if the Republican wins. He identified Valero, Patterson UTI Energy, Raytheon, Lockheed Martin, and in the medical device space, Boston Scientific. Doll says medical device companies will benefit from some tax cuts the Republicans may make for these companies.
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Stocks to buy if the Democrats win include: First Solar, Solar City, HCA, Cerner, Jacbos Engineering and Masco.
