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With the first Presidential debate in the history books, now is a good time to consider how the election's outcome could affect your portfolio.

Some argue that the re-election of President Obama will avoid the dreaded element of uncertainty, which usually inspires risk aversion among investors. On the other hand, many Republican partisans insist that the election of a Democrat to the Presidency always causes the stock market to swoon.

Studies of stock market performance after Presidential elections show that the following year experienced a positive market 75% of the time under Republicans and 58% of the time under Democrat Presidents.

Looking at larger time frames, a study by Pedro Santa-Clara and Rossen Valkanov published in "The Journal of Finance" in October, 2003, says that "the excess return in the stock market is higher under Democratic than Republican presidencies; 9% greater for the value weighted portfolio and 16% for the equal weighted portfolio," and so it appears that an argument could be made for either side regarding stock market performance under Democratic or Republican Presidents.

So maybe a better tactic would be to take a look at which sectors might benefit or be hurt by the election of a particular candidate.

Let's take a look at some examples:

President Obama's trademark Obamacare immediately comes to mind. With so many more Americans covered by health insurance, health care providers will likely experience an expanded patient base. The Health Care Select Sector SPDR ETF (NYSEARCA:XLV) invests in a number of companies including: Johnson & Johnson (NYSE:JNJ), Abbott Laboratories (NYSE:ABT) and UnitedHealth Group (NYSE:UNH). UnitedHealth will likely see their policyholder base expand significantly as a result of Obamacare and so healthcare could be a bullish sector in a second Obama Administration.

Another sector which could benefit from a second Obama term is the alternative energy sector. Obama's critics have targeted the Solyndra scandal to support arguments that the President has favored "green" energy enterprises which have contributed to the Democratic Party. The PowerShares WilderHill Green Energy ETF (NYSEARCA:PBW) invests in a number of solar cell companies as well as those involved in the manufacture of LED lighting. Some of PBW's holdings include First Solar (NASDAQ:FSLR), Kaydon Corporation (NYSE:KDN) and Fuel Systems Solutions (NASDAQ:FSYS) and "green energy" could generate "green" stock market returns in Obama Part 2.

If Mitt Romney is elected President, one sector which would be a likely beneficiary is the financial sector. Some of Governor Romney's top contributors come from this sector and so obviously they are betting on a favorable environment if the Governor becomes President. Big name contributors include Goldman Sachs (NYSE:GS), Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM) and Credit Suisse (NYSE:CS) - all of which (except Credit Suisse) are components of the Financial Select Sector SPDR ETF (NYSEARCA:XLF). Mitt Romney's frequent remarks in support of the coal industry ("I like coal") signal that the Market Vectors Coal ETF (NYSEARCA:KOL) is worthy of consideration when reassessing one's portfolio in the event of a Romney victory in November.

Regardless of who wins the Presidential Election, revising one's portfolio in anticipation of a change in government policy makes sense since each man will have his own agenda when he takes the Oval Office in January and these agendas could clearly favor some sectors and ETFs while others could find themselves falling into disfavor as the new Administration implements its policies.

Disclosure: Wall Street Sector Selector holds a position in XLF.

Source: How Will The Presidential Election Affect Your Portfolio?