Avoid Political Sheep-Think

Let us suppose, for argument's sake, that the current polls are mostly accurate the time around and that we are, in fact, looking at a "Blue Wave" on Election night, with Democrats taking the White House by a sound margin as well as most of the Congressional seats up for grabs.

If that materializes, from a stock market point of view the most logical, knee-jerk reaction for something who leans anywhere from center-right to the far right (and possibly those who lean to the left, too) is to assume that the Biden/Harris White House combined with a majority in Congress would be hell-bent on destroying fossil fuel industry as we know it. 

For reference, the four "fossil fuels," a phase which gets thrown around plentifully this century, are, 1) Petroleum, Coal, Natural gas, and Orimulsion. 

Recall, if you traded back in 2008, similar comments were made about Obama getting elected, insofar as the fossil fuel industry seemingly being dead for the foreseeable future, possibly forever in favor of renewables. As we know, things did not quite turn out that way, even as the oil/gas/coal sectors have been working through long-term bear markets--Many of the renewable sources which were supposed to replace the fossil fuels did not exactly stand up to the scrutiny of market forces even with government subsidies. 

So while solar stocks are certainly acting with great jubilation in anticipation of a coming Blue Wave, let us not ignore the contrarian bull case for fossil fuels, either. It is nowhere close to a zero-sum game yet for fossils vs. renewables, for example. 

As we have been profiling both here and with Members, the oil stocks have been steadily improving the last few weeks even on days when oil itself was lower and even on days when equity markets were lower, too. 

Beyond that, the left-for-dead coal names (we talked about ARCH earlier this week) may be even more contrarian bullish than the oil stocks, if that is possible, into a Blue Wave Election Night. If you look at long-term charts, for example, of names with coal explosive like ARCH HCC SXC, even TECK, it should be apparent they have priced in virtually all bad news over the last decade with the exception of outright shuttering of any and all mining operations. If you think that happens in a Blue Wave scenario, then so be it. 

But just as with the Obama years (2010-2014 mostly) for conservatives (and the 2003-2007 Bush years for liberals), avoid political group-think is an instructive thought experiment to conduct in the coming weeks before lurching onto dogmatic views.