it’s virtually certain that Democrats will control the next Congress (see also, "Election Season: A Great Time to Sell Stocks").

Investment Implications

At the very least, it’s only prudent to make your investment plans on the baseline assumption that these trends will prevail. Here are some of the implications:

• Companies in the healthcare industry will face heightened scrutiny. I’m not suggesting that the Democrats will nationalize healthcare or squeeze every drug maker into bankruptcy. With the government’s Medicare and Medicaid bills soaring, however, and the overall budget deficit yawning, we can expect legislation that will put pressure on the
profits of businesses in this politically sensitive sector.

The best-managed players like Johnson & Johnson (JNJ)and Eli Lilly (LLY)will find ways to survive and thrive. On the other hand, I would take advantage of market rallies over the next four to six weeks to dispose of poorly positioned companies that could suffer from a Democratic surge. Get a list of the companies on my chopping block by subscribing to Profitable Investing.

• Industries and businesses that fit well with Democratic priorities will enjoy a boost. An obvious example would be alternative energy, such as solar or wind power. I recommend an excellent “aggressive” energy play for my Profitable Investing subscribers who don’t mind a little extra risk. This specific stock is a great buy below $50.

• Higher tax rates will bring certain neglected types of investments back into favor. As I mentioned to my readers in April, the low Bush-era tax rates on dividends and long-term capital gains will automatically expire at the end of 2009 unless Congress extends them
(very unlikely). Most dividend-paying stocks have already adjusted to this prospect, at least to some degree, so it doesn’t make a lot of sense to sell now. However, the market hasn’t yet put any discernible premium on companies that use their cash flow in tax-efficient ways (buying back stock, for example, rather than paying large dividends).

At the far end of the spectrum, one of my favorite Profitable Investing Total Return Portfolio stocks has never declared a dividend. Yet, the company buys back stock whenever the share price looks attractive from an investment standpoint. In 2007, the company paid an average of $489 per share for stock it repurchased. With the shares currently quoted in the $400–$420 range, you can buy the stock yourself at a nifty discount to what the company’s sharp-penciled financial executives consider to be fair value.

In order to find out the name of this fabulous company that’s currently benefiting from insider buybacks, as well as full-disclosure to the rest of my recommendations become a Profitable Investing subscriber today.

The market is poised to profit, especially as November draws nearer. So, why miss out? Join my Profitable Investing subscribers and find out exactly which companies will see their profits soar, regardless of who takes office.

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