Preface

This article provides two potential baskets to play a second Trump vs. Biden election as well as the results. The purpose is to highlight risks, both upside and downside, in both equities and macro. It’s quite early on, but tomorrow is Super Tuesday and we will be hearing a lot more about this - and likely seeing a lot more implications on the way our portfolios move. If we’re doing groundhog day, it’s at least good to be prepared.

Same Disclaimer as Last Time: I’m apolitical by necessity. My firmly held belief, formed by experience, is that one cannot be an effective trader while at the same time being strongly ideological politically. Eventually, the bias and cognitive dissonance will get you, and you will double down on a trade that has no basis in reality but all the basis in the world in what you think reality should look like.

Therefore, please understand that I comment not on who I think should win the election or which candidate I think will be best, but only on the most likely course markets will take in response to the election’s odds/outcome. Overall, I enjoy trading much more than being opinionated about political parties but - every four years or so - there comes a time where I have to care about them in order to discern their impact on stocks. That’s all this is.

Also, as interesting as it would be for a dark horse candidate to pull ahead (and maybe one does), it’s looking right now like it will be Trump vs. Biden - that’s what I’ll be basing this framework off of. If things change I will update for that.

Back to our regularly scheduled program…