hillary clinton <u+2019>s chances of winning the white house are increasing, if you believe political forecasters. but if you put your faith in the stocks that are supposed to benefit from the election outcome, it is donald trump <u+2019>s odds that are rising. political surveys from the likes of fivethirtyeight , cnn and predictwise differed compared with the politically driven portfolios from two financial research firms that are constructed to benefit from the election<u+2019>s outcome. that might suggest a potential political surprise could be in the offing. the explanation is probably more prosaic: political portfolios reflect conventional wisdom and can<u+2019>t account for surprise business developments or effective lobbying. new york-based strategas research partners says its republican portfolio has outperformed its democratic portfolio for four straight days. separately, research firm cornerstone macro says its clinton portfolio was outperforming its trump portfolio by about two percentage points prior to last week<u+2019>s presidential debate. that was among the widest gaps since mid-july. since then, however, its trump portfolio has not only recovered but is now beating clinton<u+2019>s, even following her solid debate performance.<u+00a0>the<u+00a0>trump portfolio is bullish on energy and defense stocks whereas its clinton portfolio favors infrastructure and alternative energy stocks. daniel clifton, head of policy research at strategas, says its democratic portfolio has been hampered by an unexpected decline in healthcare stocks. generic drug company mylan , a clinton stock, has fallen on epipen pricing issues. additionally, he suggests polls may be too optimistic about ms. clinton<u+2019>s prospects. a broader takeaway is the danger of making political bets in the stock market. individual company news often supersedes the broader political backdrop. even if an investor correctly predicts a political outcome without exogenous factors taking over, it doesn<u+2019>t mean financial markets will behave accordingly . get financial insights and commentary on global investing from the wall street journal<u+2019>s heard on the street team. subscribe to the podcast. consider barack obama <u+2019>s election and the passing of the affordable health care act. it was widely panned as being bearish for health-care stocks. yet health care has been one of the s&p 500<u+2019>s top-performing sectors during much of the current bull market. firearm stocks also have beaten the market by a significant margin, even as mr. obama has called for new restrictions on gun sales. companies tend to adjust to new political, economic and regulatory environments, with their stock prices reacting accordingly. mixing politics and portfolios can be a dangerous recipe. write to steven russolillo at steven.russolillo@wsj.com
election says only so much about stocks    - wsj
steven russolillo