4 stock-market experts break down how to invest heading into 'uncertain' US presidential election

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4 stock-market experts break down how to invest heading into 'uncertain' US presidential election
Traders on the floor react before the opening bell on the New York Stock Exchange on March 9, 2020 in New York.Timothy Clary/AFP/Getty Images
  • The upcoming US presidential election could be one of the most uncertain elections in the nation's recent history, making current investing decisions difficult.
  • UBS says that a contested outcome is possible, and investors should head into safe assets right now.
  • Here's what four market experts are saying about how to invest heading into the election.
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The upcoming US presidential election is said to be one of the most uncertain elections in the nation's recent history. Some Wall Street firms, like UBS, are even saying that the outcome of the election will be contested for quite some time after November 3.

Markets don't like uncertainty, but there are a number of portfolio strategies to prepare for what's ahead. Here's what four market experts are saying about how to invest heading into the election.

1. UBS: Expect a contested election, buy safe assets.

In a note published Monday, UBS said that the outcome of the election is far from certain, and investors should head into safe assets like gold.

"A contested outcome is still a possibility, which could add to further volatility and result in safe-haven flows, though more into gold, the Swiss franc, and the Japanese yen than into the US dollar, in our view."

Investors should use the current drop in gold prices to add exposure to the precious metal, Mark Haefele, chief investment officer of UBS Global Wealth Management, said.

2. Goldman Sachs: Seek opportunities in healthcare options trades.

"Stocks exposed to tax reform and the health care sector appear to be most clearly demonstrating their sensitivity to the election outcome," a team of Goldman Sachs strategists wrote in a Tuesday note. "Our options strategists pointed to the opportunity they see in health care call options given the sector's unusual implied volatility discount and depressed valuations."

Read more: UBS says the chances of a Democratic sweep have risen to 50% as Trump and Biden square off in their first debate. These 9 assets will help investors profit if a blue wave comes crashing in.

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3. JPMorgan: Go underweight US stocks.

John Normund, JPMorgan head of cross-asset fundamental strategy, suggested investors be underweight in US assets, like domestic stocks.

"If your baseline assumption is that there's going to be a contested election ... recognize that this is a US-specific event and therefore that argues for underweighting US assets versus other assets," he said in an interview with Bloomberg on Tuesday.

4. Morgan Stanley: Skew your portfolio based on the outcome.

Mike Wilson, chief investment strategist at Morgan Stanley, told CNBC on Tuesday that the stock market will go up no matter which candidate wins the election. But investors should be ready to skew their portfolios depending on who wins the election.

In a Democratic sweep, sectors like financials and energy may fare poorly because of increased regulation. Technology stocks may still perform well in a blue wave, though, because Wilson said Democrats "won't be as tough" on tech regulation.

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