Stocks Should Be Higher After Election: Strategist

Friday, 28 Sep 2012 | 4:39 PM ET
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The U.S. is the best house on a bad block, and investors should stick with U.S.-focused stocks, Alec Young, S&P Capital IQ strategist, told CNBC on Friday.

That has his firm advocating an overweight stance on technology and consumer discretionary sectors while underweighting utilities and materials.

“The overriding theme is that we want to be more domestic,” Young said. “We think most of the risks out there are global.”

He also said investors should hedge against more bad news from overseas by going long on the consumer discretionary sector while shorting materials.

“Nothing is more vulnerable to bad news out of China than the entire commodity complex,” Young noted.

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With pent-up demand and ongoing corporate productivity enhancements, S&P is “less worried about a negative surprise within tech,” the strategist said.

Investors should also position for gains in the market following the election. Young noted that in election years, the S&P 500 tends to make its annual high in November and December after the election. “There’s a strong track record that removing the uncertainty of who wins the presidential election and the Congress helps stocks,” he said.

Young also said that they’ll be plenty of time for investors to position for the “fiscal cliff” – when a number of tax cuts expire and spending cuts kick in later in the year — later in the year. “If you’re worried about it, you can hedge it from what we thing will probably be higher levels,” Young said.

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