Worried that President Obama’s re-election will be bad news for stocks? Top strategist Kenneth Fisher says that idea is hogwash.
“Nonsense,” Fisher writes in discussing the Obama re-election fears in a column for Interactive Investor. “There is scant clear evidence either party is materially better for shares in the long-term. But there is a lot to be bullish about following this election that goes unnoticed.”
Fisher notes that stocks have risen every year under Obama, and says that wouldn’t have happened if he were a “market killer”. But, he adds, ” Obama didn’t cause that bull market any more than he can be the primary cause of a bear market.”
Fisher says that the party holding the White House hasn’t mattered on average for stocks over the years. But, he adds, “it can impact risk aversion at certain points in the election cycle.” Democrats usually campaign on stricter regulation, which leads to high fears — and unspectacular returns — in election years. But he provides data showing that stocks tend to fair well in the inaugural years of Democrats’ terms in the White House, good news for stocks in the coming year. “In an inaugural year, markets are pleasantly surprised when the Democrat isn’t able to do as much as feared,” he says. “He can’t pass as much extreme legislation — either because he doesn’t really want to for a variety of reasons — or he can’t due to gridlock. And with one exception, Obama faces more gridlock in 2013 than any other Democrat.”
The notion that gridlock will prevent a “fiscal cliff” solution and crush stocks is a “false fear”, Fisher contends. And he says not to give in to fears. “Ideology is a dangerous bias in investing — blinding you to reality,” he writes. “Like or hate Obama’s policies — it doesn’t matter. What investors should care about is the capital markets impact. And there’s no evidence a Democrat is disastrous for shares. It doesn’t mean shares must rise in 2013. Rather, the fear shares must fall just because a Democrat was re-elected is simply baseless.”
False fears are a bullish sign, Fisher says. He offers three stock picks, including Oracle Corporation.