As markets await the outcome of today’s U.S. presidential election, experts say investors are using a number of different strategies to hedge against uncertainty as the race remains too close to call.

“Stop me if you’ve heard this before, but this is the most important election of our lifetimes, and the two candidates are completely diametrically opposed,” Dennis Mitchell, CEO and chief investment officer at Starlight Capital, told BNN Bloomberg Monday. interview.

Mitchell said former President Donald Trump’s promised cuts to the federal corporate tax rate are widely seen as positive for U.S. stocks, even though Trump’s proposed tariff policies risk accelerating inflation, which would reduce corporate profits.

Meanwhile, Democratic Vice President Kamala Harris has signaled that her administration will raise the corporate tax rate, Mitchell noted, but despite the negative impact a tax hike could have on corporate profits, his plan is less inflationary in the long run, he said.

As investors weigh the effects each candidate’s proposed policies would have on stock markets, many have chosen to wait until the election outcome is decided before taking major action, says David Dietze, senior director and strategist at principal investment at Peapack Private Wealth Management.

“There’s a group of investors that just want to stay on the sidelines before this election… and just want to get out of the market,” he told BNN Bloomberg in an interview Monday.

Dietze noted that Berkshire Hathaway Inc. Chairman Warren Buffett, “arguably the most famous (and) successful investor on the planet,” recently sold large amounts of large-cap U.S. stocks such as Apple and Bank of America.

But Tim Urbanowicz, head of research and investment strategy at Innovator Capital Management, told BNN Bloomberg on Monday that despite continued uncertainty, stocks have continued their upward trend in recent weeks, suggesting that overall , investor confidence remains high.

“What you typically see in an election cycle is that leading up to Election Day, you tend to see stocks sell off and volatility increase… but this cycle has kind of broken that trend ” he said.

“I think one of the main reasons why that’s the case is that investors have a pretty clear view on a number of issues that they see as problems.”

Urbanowicz said betting markets put the odds of a Democratic victory in Congress and the White House — the election outcome that he said would hit U.S. stocks hardest — at less than 15 percent.

“If you look at this in the context of the possibility of higher corporate tax rates, changes in capital gains tax rates, things that investors don’t necessarily like, they see very unlikely to happen, which is why I think we saw the volatility suppressed,” he explained.

“Winners and losers”

Urbanowicz said that whatever happens in the U.S. Senate and House of Representatives after today’s vote, “there will be winners and losers” in the marketplace depending on whether Trump or Harris is elected.

Michael Currie, Senior Investment Advisor at TD Wealth Management, told the Canadian Press last week that “depending on the sector, the field in which you work, you will have a favorite”.

Although a Harris victory would likely provide a boost to renewable energy stocks, the oil and gas industry would fare better under a Trump administration, said Brianne Gardner, senior wealth manager of Velocity Investment Partners at Raymond James , to the Canadian Press.

Urbanowicz added that investors who try to get ahead of the market and predict the election winner before all the ballots are counted will have difficulty analyzing polling data and betting market odds, which do not match always.

“I think there’s a slight more conservative bias in these markets…and you get mixed messages, like if you look at the Iowa poll this weekend, it tells a much different story than the US markets. Paris. we take that into account,” he said.

“So overall, I think it will be neck and neck, it will be very close, and I would expect an increase in volatility in light of this tightening of the race.”

Markets will “ignore the noise”

After the last US presidential election in 2020, Joe Biden was not declared the winner until days after Election Day, causing prolonged uncertainty and volatility as Trump expressed his intention to contest the outcome of the vote.

Mitchell said if a similar scenario occurred this week, it would not impact markets to the same extent.

“The markets will ignore all the noise the Republicans are making, especially since Trump is not the sitting president. It was different four years ago, when he had the ability to confuse process with revenue,” he said.

“Let’s not forget that Trump scored 62 in his legal challenges, so the markets will ignore all of that. What they will focus on is who will actually win.

With files from The Canadian Press