Trade The Vote: Insights from Dennis Gartman
On Tuesday we’ll decide who’s going to be our next President. And you might want to start preparing now.
This market hardly needs one more ounce of volatility but chances are the election will deliver a jolt. As things stand at the time of writing, it appears likely that Barack Obama will win the White House. And we’re hearing the market has factored in a Democratic win by about 80%.
But likelihood is very different from reality. If we do in fact have a President-elect Obama on Wednesday morning there will probably be chatter about just how much taxes could increase, whether military spending will drop precipitously and what’s in store for healthcare. It will all be rumors of course, but that could spook the Street, nonetheless.
And that’s only one scenario. That other is that John McCain stages the upset of the century and comes back from behind to win the White House. Republicans are typically considered the party of business and the market could like that. But he too is promising healthcare reform and new energy initiatives.
Either way election week could be a bumpy ride. And strategic investor Dennis Gartman tells us, “Do not trade ahead of the election."
He's smart so it's probably a good idea to heed his advice but what about after?
"The market believes that Obama is going to win," explains Gartman. "It’s hard for right-winger like me to admit it, but the best markets are under a Democratic President," he says. "However, we have to get used to the fact that we’re going to be in a much more regulated environment. That’s what I expect to face for the next 4 years."
Although Barack Obama isn't on the phone, Gartman has a word of advice. "If I could counsel Obama I would tell him not to raise taxes on capital gains or dividends. I don’t think we want to send a signal to the rest of the world that if you come to the United States and bring capital, it’s going to be taxed at a higher rate. If we do, capital will seek to go elsewhere. It goes to where it is treated the best."
Tim Seymour thinks if Dems win the White House it will be a tough time for healthcare stocks. "Insurers will have to take on pre-existing conditions," he says.
And in case you’re wondering Gartman owns banks, infrastructure and nat gas stocks and is short the market as a hedge.
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Trader disclosure: On Oct. 31, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Seymour Owns (AAPL), (F), (MER), (EEV); Seygem Asset Management Owns (PBR), (VIP), (CX), (EEM); Karabell Owns (AAPL), (CAT), (CSCO), (GOOG), (JPM), (MS), (VIP), (UTF), (AGU); Terranova Owns (AAPL), (EXM), (FCX), (VLO), (X), (POT), (NOV), (MA), (FTO)
Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV)
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