new business cycles are favorable to smaller companies.

Small-Caps To Buy Now

Historically we know that small caps outperform the larger caps at the start of a new rally. I would suggest looking at adding an exchange traded fund like iShares Russell 2000 Index Fund (IWM).

Obama figures to invest heavily in alternative energy. That means stocks in this segment should do well as we look to reduce our dependence on crude oil.

Given the risky nature of new technologies investors can own a diversified portfolio of alternative energy plays with an ETF like Market Vectors Global Alternative Energy ETF (GEX).

McCain’s impact on the market thus far appears to be negligible. The assumption is that a McCain Presidency would be a continuation of the current administration and therefore the market need not factor in any changes to policy.

The market has that wrong in my opinion. McCain is a maverick and as such the market should be anticipating some things here that may not be expected with your typical Republican administration.

Although he is in favor of more drilling to solve high oil prices, McCain does seem willing to invest in alternative energy like Obama. That means GEX would be in play here for investors.

McCain is also in favor of a strong defense with respect to the war on global terrorism. Defense company stocks like Lockheed Martin (LMT) and Northrop Grumman (NOC) should do very well with a McCain victory.

I would avoid the small cap stocks if McCain is the winner as there would still be the bias toward very large companies in his administration. In addition, I think stocks will be slower to rally as opposed to a complete change candidacy victory with Obama.

Both candidates will do infinitely better as opposed to the current administration. When the history book is written the scale of the failure will be even larger than we recognize at the moment.

To me that suggests that stocks will rally no matter if the winner is, red or blue.

For more information on the how the election could effect your portfolio, also read, "Beyond November: Politics and Your Money."

This article was written by Jamie Dlugosch, contributing editor to InvestorPlace Media. For more actionable insights like this, visit www.InvestorPlace.com.