The Election is Over: Focus on Fundamentals, Not Politics

Call it a quadrennial ritual: In the first weeks after the US presidential election, investors scramble to find the trades that will work best under the incoming administration. Invariably, they forget that US government policies are just one of many factors that can influence corporate earnings and investment returns.

Eight years ago, the conventional wisdom assumed that the Obama administration would be toxic for the stock market, especially the health care, financial and energy sectors.

With only a few weeks left in Obama’s second term, the S&P 500 is up 210 percent, with the health care and financial sectors outperforming. US oil and gas production also reached new heights under Obama’s watch.

Conversely, despite rising adoption of renewable energy, Guggenheim Solar (NYSE: TAN)—an exchange-traded fund that offers one-stop exposure to solar-power stocks—burned up almost 80 percent of its value during Obama’s terms in office.

Like Obama in 2009, President-elect Donald Trump will take office with his party in control of Congress, creating the potential for the new administration to deliver on promises to cut taxes, reduce regulation and promote infrastructure investment.

The past eight years reinforce that Republicans may not accomplish everything they set out to do.