How to protect your portfolio from Hillary

Published Mon, Apr 25 201612:39 PM EDT

Patti Domm @in/patti-domm-9224884/@pattidomm

Wall Street believes Hillary Clinton will be the 45th president of the United States, and that makes investing ahead of the election a whole lot easier. Clinton is viewed as having clear opinions that are far more consistent than those of her main rival, Republican front-runner Donald Trump. Strategists have targeted a group of sectors that they think will be most impacted both positively and negatively with Clinton in the White House. Trump's behavior is a lot less predictable, and that makes investing on his views a lot trickier. One thing he has going for him should the GOP make an unexpected sweep, is that historically the stock market's performance is best when there's both a Republican president and Congress. When Republicans control Congress and the presidency, the S & P 500 has averaged 15 percent returns going back to 1933, according to BNY Mellon Wealth Management. But a Clinton victory could give the country a Democratic president and Republican Congress, still not a bad recipe for the stock market. According to BNY Mellon, in the years when there was a Democratic president with an all-Republican Congress, the S & P 500 has averaged 13.3 percent. That return rises slightly to 13.6 percent if the president is a Democrat, the House is Republican but the Senate is Democrat. Clinton's win is already embedded in the market price, said Jeff Mortimer, director of investment strategy at BNY Mellon Wealth Management. "If something happens that changes that dynamic, it will change in price." Mortimer said Clinton's positions have already had direct impact on biotechs and pharma. In September, she turned to Twitter to voice her views on high-priced drugs. "The Hillary tweet certainly priced that in instantly," said Mortimer. Read More Pro Talks: Billionaire Wall Street pioneer Peterffy Besides biotech, BNY Mellon Wealth Management sees potential negative impact on energy because of her position on coal. Managed care and financials could also suffer from a Clinton presidency. On the other hand, infrastructure and renewable energy should benefit. Mortimer said the defense sector might benefit from Trump, but he could be negative for multinationals because of his views on trade. Trump's tax policy may also be seen as more positive, and he may be more positive than Clinton for health care. Another factor for market performance would be which party ends up with control of the Senate, because a Democratic president and totally Republican Congress could end up with more gridlock. Republicans are expected to retain control of the House. According to S & P Global Market Intelligence, a Clinton victory could put more pressure on banks and insurance companies amid worry that they'll be viewed as "too big to fail." Climate change–related stocks would benefit from Clinton. But Trump could be positive for refineries, since he would support reducing some fuel additives, according to S & P analysts. Trump has said he would also get rid of the Affordable Care Act. "Trump would be bad for hospital management, managed care and health care in general," said Sam Stovall, chief U.S. equity strategist at S & P Global Market Intelligence. Stovall also said telecom and cable companies may be positively impacted by Trump as they want tiered access to internet service, instead of equal access. Mortimer said if Trump does pull ahead, investors would need to examine his policies. "It's one thing to talk on the stump, and it's another thing to get it through Congress and get things done and change things," said Mortimer. Mortimer stressed that the election is only one issue that could affect markets this year, and the market is not really focused on it right now. He said while Wall Street may ultimately be satisfied with the outcome after a bumpy election year, there are messages in this election that investors must consider. Front-runner Trump and Democrat Bernie Sanders are each far from the mainstream but have strong support. "Is this one a paradigm shift? Is there so much anger that change will be demanded? And those are things we are watching as well. I think it's important to always look at the historical trends but to make sure you're not always bound by that," said Mortimer. "Paradigm shifts do happen. Is this one of them?" Stovall said if history holds true, the winner will be known by the market's behavior this summer. Mortimer said there are plenty of other factors for investors to consider, but one thing about this election is that it has been unusual. Stovall said if the market goes up between July 31 and October 31, the incumbent party tends to get re-elected. "But I think Wall Street would be happier with Hillary than Donald because she's less of an uncertainty," he said.

Donald Trump and Hillary Clinton

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Wall Street believes Hillary Clinton will be the 45th president of the United States, and that makes investing ahead of the election a whole lot easier.

Clinton is viewed as having clear opinions that are far more consistent than those of her main rival, Republican front-runner Donald Trump. Strategists have targeted a group of sectors that they think will be most impacted both positively and negatively with Clinton in the White House.

Trump's behavior is a lot less predictable, and that makes investing on his views a lot trickier. One thing he has going for him should the GOP make an unexpected sweep, is that historically the stock market's performance is best when there's both a Republican president and Congress.