By: Lisa Thuer - Senior Trading and Research Specialist
We are a week away from a historical Presidential Election. A new twist seems to take place on a daily basis in both camps of Clinton and Trump. Unfortunately the market does not like the uncertainty that is taking place. These volatile times make investing in the near term a very difficult time to deal with the volatility and the fear of the unknown. Each candidate has their own agenda. How much they will be able to get done in Washington also depends on if we remain a balanced government with Congress or if it will be one-sided. Approaching Election Day, we thought it would be clear as to which direction the markets will be heading. However, everyday there seems to be a new headline leading to more uncertainty.
Healthcare has been a drag on our portfolios this year. It is one sector that had been hit hard at the beginning of the year and was not able to bounce back as other sectors did. The healthcare sector is filled with innovation and advancements allowing people to live longer and cures for cancer and other diseases to name a couple. Baby boomers and our aging population are all benefiting from the advancements taking place in this sector. Unfortunately, the elections are wreaking havoc in this area and the regulations that may be implemented are unknown. We have made a decision to reduce the risk going into the Election next week by taking healthcare off the table. Pharmaceuticals and Biotechnology will continue to be volatile in the coming months. We still believe this is an area of growth in the future; however we will sit on the sidelines and wait for all the regulatory issues to fall in place.
The rest of our portfolio will remain invested in the current asset allocation of stocks, bonds and alternatives and we will not make any further changes until after the Election. Even with the volatility that will take place in the coming days and weeks, it is built to weather the storm. The talk has been swarming that there will be a tax repatriation holiday where multinational companies will be able to bring back foreign profits to the U.S. at a favorable tax rate. This would benefit the U.S. and us as investors by encouraging the corporations to spend and create jobs along with a possible one-time special dividend to shareholders. Therefore we are willing to be patient in the remainder of our portfolio and do not want to be out of the markets when this does take place.
In the meantime, we appreciate your confidence and support through these difficult market times. Should you have any questions, please feel free to contact one our KFA team members.