Following the Iowa caucus, Cramer on Wednesday contemplated which presidential candidate could be best for the stock market. But in the end, he thinks that despite who wins the White House, just one thing matters to investors and that is certainty.
To start, Cramer thinks it’s important investors know who is going to win. So even if the economy falters because of Europe’s debt crisis or if U.S. jobless claims rise, investors can worry less because they will have a good idea of who the next president will be. The market likes to know who it’s dealing with, he said.
If President Barack Obama wins another term, Cramer would sell bank stocks because he thinks the big banks could get broken up or penalized to the point where they will have no earnings to speak of. He would also sell health care stocks because even if the U.S. Supreme Court doesn’t overturn “Obamacare,” Cramer thinks the president will figure a way to reinstate it. Cramer would also be leery of oil-related plays because it’s likely the U.S. Environmental Protection Agency will be tougher on oil companies if Obama gets reelected. The EPA could, for example, ban fracking for natural gas.
On the other hand, Cramer thinks there are still are bull markets to be found, even if Obama gets a second term. Should that happen, he would recommend buying dividend-paying stocks. He also would like the dollar stores and other discount retailers, such as Ross and TJX Companies .
“You have to like gold under Obama because he's perceived as someone who can't build a consensus around radical budget cutting which means we will come closer and closer to our own liquidity problems,” Cramer said. “That will really serve to boost gold as I suspect that the bond vigilantes will come here after they have tortured Europe.”
Should former Massachusetts Governor Mitt Romney win the presidential election, Cramer thinks investors will have a greater selection of stocks to buy. He would invest in oil and gas names, for example, because he’s fairly certain Romney will embrace natural gas as a transportation fuel. Investors could also buy bank stocks because Cramer is betting Romney will “defang” Dodd-Frank, the financial regulatory reform bill Obama signed into law.
The bottom line?
“Until we get certainty or at least clarity, we are going to be buying stocks and selling them depending on every poll, the worst possible scenario,” Cramer said. “Certainty puts an end to that. We will then be in shape to pick the stocks that will go higher, no matter what and the places where the bull market will live will be readily evident.”