Let's do something, right now, that can put things in context. Let's go over the five great misconceptions that spring from presidential elections.
First misconception: If a Democrat wins, Congress will slash the defense budget. Total hogwash. Democrats love to spend money on defense, particularly high-tech defense. The pure play on that is L3Harris (LHX) with a stock that has been a real dog. I like that. Good management, good book of business. You might want to consider Raytheon Technologies (RTX) , which has an unfathomable amount of defense business -- $70 billion with the government, but it does have a big aerospace business, which is just a disaster for the moment. I don't think it will be next year, though. Two worth considering that missed numbers: Lockheed Martin (LMT) and General Dynamics (GD) . They are so cheap, and Jim Taiclet, formerly of American Tower (AMT) , where he made shareholders a ton of money, is now at the helm of Lockheed Martin. It missed on the space line, made on the rest. I can't believe Taiclet won't fix that one. General Dynamics is the cheapest I have ever seen it, so nice bottom there.
Second myth: There's going to be big changes in health care if the Democrats win, which will really hurt the managed-care companies and drug pricing. I have seen this rap first articulated during Bill Clinton's time, almost 30 years ago. A Democratic win will cause these health-care stocks to get hammered. Do not out think this: Buy them. I don't even care which ones you buy, but Centene (CNC) is the cheapest of the health care companies and Bristol-Myers Squibb (BMY) is the most attractive of the drug stocks.
Third Myth: Biden will be bad for the oil business. Actually he will be great for it, because he will try to limit it as best he can with fracking as a real issue. That's fantastic news for the incumbents, which is why you should buy Pioneer (PXD) for growth and Chevron (CVX) for income. Anything that curbs the supply side is great for these stocks, and that's what Biden will do. Trump crushed the group with his desire to allow drilling everywhere.
Fourth Myth: The banks will do worse under Biden than they have under Trump. It is hard to imagine a worse set up for the banks than what Trump has given you. They can't raise their dividends. They can't buy back stock. I think Wall Street has heavily favored Biden. They don't like surprises, they don't like uncertainty. Those are the stock in trade for President Trump. You may actually have to jump ship from some fin tech where you might have been hiding, while waiting for the banks to do better. I think that Biden's terrific for them. The two cheapest, oddly with the least credit issues: Goldman Sachs (GS) and Morgan Stanley (MS) .
Final myth? The Democrats want to break up tech. If only this were the case. After that Alphabet (GOOGL) quarter, where they broke out the different divisions, I realized that the Justice Department will act like a catalyst to bring out value of all the different divisions. The Justice Department is playing the role that's usually reserved for an Elliott Management, an activist firm. Could they break up Facebook (FB) ? I think that Facebook, Instagram and What's app are worth a lot more together than separate, but the market may disagree with me. In the end, they will do nothing. They need a court to agree with their breakup plans and I can't imagine one that would play that game.
Why do these misconceptions exist? I think it is because of donations: The fact is the Democrats need money, just like the Republicans, they are just more sub-rosa and subtle.
Let's do something, right now, that can put things in context. Let's go over the five great misconceptions that spring from presidential elections.
(BMY, GS, GOOGL and FB are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)
