Big news on the day has to be the Senate race in Georgia and what a Democratic shift is going to do to the markets. Some people are worried about “their” party winning or losing and what the implications will be in a world that may differ from their views. I, as always, will be looking for how this will create opportunities to make money.

With a Democratic shift most thoughts go towards higher taxes, clean energy, and more regulation. Tech already is starting downward this morning as the fear is further regulation will lead to compressed earnings and thus a fall in prices.

How do we play all these things?

Well that is for each of us to decide and create a strategy around. Innovative companies will always be leaders in future earnings growth as everyone in their sector will have to deal with the same laws and regulations. Companies with low debt will still be safer than those that are highly leveraged and those that pay a solid dividend will be a better income play than savings that pay below inflation. While parties may change in power, fundamentals always win over a long period of time.

Hedging against losses are tricky but when looking at the broad market one could say that hedging into some value ETFs, if tech heavy, or bonds, if stock heavy, could be a good idea. Maybe adding some overseas currency ETFs as the consequences of the stimulus payments are worked through? Inverse index ETFs? Maybe if you believe this all will lead to a slow down in the market that continues to rage on.

My point is there are a ton of ways to play this, one of which is to just keep investing in good companies with your head in the sand about politics. Another is to hedge. To each his own and I disagree with none of them as long as the reasoning is solid and true.

Until next time, happy investing.