Why the US election is a golden opportunity for stock pickers

Who’d be invested in stocks, right? Madness.

The US election process has wreaked havoc on the ASX in recent days. One of my companies – a profitable, promising business with no debt – is down more than 25% since the start of October, while my whole portfolio is down 7% over the same period. Ouch!

Election woes

Hillary, or Trump? That’s the multi-billion dollar question. Australian shares with exposure to the US have been in freefall recently, with Westfield Corp Ltd (ASX: WFD), ResMed Inc. (CHESS) (ASX: RMD), and Brambles Limited (ASX: BXB) each down some 15% since August.

source: Google Finance

source: Google Finance

Maybe the market thinks Westfield will lose customers if Trump wins because we’ll all go live on Mars. Maybe it’s worried Trump will grab his torch and pitchfork and jet off to burn down Brambles’ pallet business. I would have thought plastic crates would be at the absolute bottom of Trump’s list of priorities, but who knows?

There’s always something to worry about

If you’re worried about the US election, you shouldn’t be. On YouTube there’s a great clip of legendary fund manager Peter Lynch in 1994, explaining why there’s always something to worry about:

“…except for the 80’s, the 50’s was the best decade of the century to own stocks, and people wouldn’t buy stocks because they were worried about nuclear war, and they were worried about the risk of depression.”

Or this gem:

“Remember when oil went from $4 to $40, and it was gonna go to $100, and we were gonna have a depression? Well about 3 years later the same experts – now higher paid – oil’s at $10, and it’s gonna go to $4, and we’re gonna have a depression.”

Nuclear War vs a Trump Presidency

Nuclear war might have been a reasonable fear, and a Trump presidency certainly pales in comparison. Not only did those worries turn out to be spurious, some years after that speech, oil actually hit US$100/barrel and stayed there for close to a decade.

Every now and then the stock market will wobble – that’s a fact. If it wasn’t the US Presidential elections it would have been something else – Brexit, Grexit, commodity prices falling, US dollar rising, interest rates rising (my money’s on this as the next ‘crisis’).

Is Brambles really going to sell less pallets in the US if Trump wins the election? Will fewer people shop at Westfield’s malls? Unless the man knows the cure for sleep apnoea and isn’t sharing it, I also doubt ResMed will see one iota of difference in its sales if he wins.

You’d be mad to sell your stocks over a presidential election, and even madder not to take advantage of some of the bargains on offer. With the S&P/ASX 200 (INDEXASX: ^AXJO) (ASX: XJO) down 4% in the past 30 days alone, I reckon it might be time to start looking for bargains – but be quick, because I don’t think they’ll be here for long.

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Motley Fool contributor Sean O'Neill has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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