We’re on the precipice of some big events.
Not only are we on the verge of a new year and a new decade, we’re potentially facing the end of a 10-year bull market…
And possibly a new president.
^^Kenny Powers 2020^^
Now, I don’t like to talk politics (or any topic where it’s impossible to change someone’s mind), so don’t worry — I’m not here to push a political agenda.
I AM here to prepare my readers for what could happen in the stock market, though. And show them how to MAKE MONEY in any environment.
So today, I’m running down some stocks and sectors that could be vulnerable if a Democrat takes the White House next year.
And tomorrow, for my Weekly Windfalls paid-up subscribers, I’ll counter that with a look at stocks that could be at risk if Trump is re-elected.
Oil stocks soared after Trump’s surprise victory in November 2016, so if history is any indicator, this sector could be at risk if he loses next year.
Heading into the last election, offshore oil concern Tidewater (TDW) stock was down 79% year-to-date (YTD) in 2016.
In the month after the election, TDW more than doubled.
Similarly, Transocean (RIG) was down 20% YTD before the 2016 election, but rallied more than 50% in the month after Trump won.
HollyFrontier (HFC), Northern Oil & Gas (NOG), and Hornbeck Offshore (HOS) also reversed steep YTD losses from November to December 2016.
It’s worth noting that most of those stocks have since petered out, defying the broad-market trend to new highs. Still, a Democrat in office — who is more likely to push renewable energy sources — likely won’t benefit the oil and drilling industry.
It was the same deal with private prison stocks like CoreCivic (CXW), which was sitting on a YTD loss of more than 45% ahead of the 2016 election, before more than doubling by February.
The day after the election, the shares saw their biggest one-day percentage jump since mid-2000.
Traders scooped up CXW with a vengeance, amid expectations that Trump would halt the Obama administration’s plans to phase out private prisons.
Again, these stocks have surrendered most — if not all — of their post-election gains. But if a Democrat takes the White House, we can expect more lax immigration policies, which could hurt private prisons — especially those working with ICE.
In fact, back in June, CXW stock slid after presidential candidate Elizabeth Warren proposed banning privately owned detention centers.
Financial stocks also rallied in late 2016, amid expectations that Trump & Company would roll back industry regulations.
The SPDR Financial Select Sector ETF (XLF) jumped close to 20% in the month after the election, and was hitting new highs by early 2018.
The fund backpedaled in late 2018, but has since surmounted resistance around its former highs to trade in the $31 range.
However, if a Democrat is elected in 2020, re-emerging regulatory fears could send bank stocks — currently overbought — back to Earth.
It is true that Trump hasn’t exactly been an advocate for Silicon Valley. The president was just accused of trying to personally “screw” Amazon (AMZN) CEO Jeff Bezos out of a $10 BILLION Joint Enterprise Defense Initiative (JEDI) contract.
Still, earlier this year, Elizabeth Warren outlined plans to break up some of the world’s biggest tech companies, and mentioned four of five FAANG stocks: Facebook (FB), Apple (AAPL), AMZN, and Google parent Alphabet (GOOGL).
Warren claimed, “The giant tech companies right now are eating up little, tiny businesses, start-ups — and competing unfairly.”
Plus, a Trump defeat could cost Facebook some ad revenue… In the week through Dec. 5, the commander-in-chief ran more than 2,500 ads mentioning “impeachment” or “impeach” — more than the prior two weeks combined, according to Reuters.
FB stock, meanwhile, soared after the 2016 election, but in recent months has struggled to make a decisive move above $200 to take out its 2018 highs.
And finally, as I mentioned yesterday, healthcare is among the biggest issues facing this country right now.
UnitedHealth (UNH) and other big insurers took a beating earlier this year, after presidential candidate Bernie Sanders unveiled his “Medicare for All” plan.
And while Elizabeth Warren’s plan indicated she wouldn’t push for a major healthcare reform until her third year in office, a non-GOPer in the White House could certainly weigh on insurers once again.
What’s more, UNH stock is overbought right now, with a Relative Strength Index (RSI) above 72. A strong showing from the Dems this campaign cycle could trigger a correction.
A Market Downturn Doesn’t Mean Money Under the Mattress
Well, there you have it, guys and gals.
No matter what happens come November, we can be almost certain that it’ll swing stock market prices one way or another… and since we’ve been in a bull market for so long, smart money is on the downside.
But even if stocks sell off, guess what?
YOU CAN STILL GET RICH.
Not only do I profit from bearish trades all the time with the Weekly Windfalls’ “casino strategy” — I’m about to dedicate AN ENTIRE SERVICE TO SHORTING STOCKS.