It's amazing how many pundits think markets will do better if Romney wins the US election. Yet the market itself appears to disagree. US markets have been very closely correlated with Obama's re-election chances. Before the debate, when Obama was riding high in the polls, the markets were rising. Ever since Obama's poor debate performance, the market has sold off. Historically, whenever a sitting president gets re-elected, markets have done well – even more so when it's a Democrat.

Longer term, markets GDP, corporate profits have done considerably better during Democratic administrations than during Republican administrations. This has been the case for more than a century. Even Fox Business (not exactly left-leaning) is willing to admit this. http://www.foxbusiness.com/investing/2012/09/04/history-shows-markets-gdp-outperform-under-democrats/

So why is that? After all, Republicans are deemed to be more business & wall street friendly. I believe the answer lies in the structure of the economy. About 70% of GDP is consumer spending, so anytime you give money to the poor & middle class, it gets spent and quickly generates economic growth and profits for companies. Democrats generally favour this group. Republicans tend to favour the wealthy – typically via tax breaks. If you give a billion dollars to a billionaire, it just gets put on the pile and doesn't get into the economy. Furthermore, Republican pet projects, such as military spending and wars, do very little for the domestic economy.

Even the “socialist” Obama has seen markets double in under 4 years. By comparison, the market went straight down for Bush's first 2 years and had barely recovered just before it crashed. S&P was down after Bush's first 4 years, and down even more after 8. I do not know why market pundits continue to ignore historical facts.

All indications are this year's contest will be close. Investors should pay close attention. If the polls swing back to Obama in the days before the election, market should rally into January. But if Romney wins, markets will be up for 1 or 2 days (due to the end of uncertainty), but that would be it – I'd sell into that.