The best advice for investors who are scared of Elizabeth Warren

Brian Sozzi

It’s not reflected in the stock market yet, but make no mistake about it — Wall Street is growing worried about what a Senator Elizabeth Warren presidency would mean to stocks and the health of Corporate America.

The best advice for investors during Warren Poll Watch Month? Stay patient, say most pros, and don’t be so fast to subscribe to consensus thinking that a Warren will obliterate stock prices.

“We would advise investors to be cautious against two dimensions when thinking about elections and their portfolios today. One, it’s really hard to tell who is going to win. As we learned in 2016, even the day of the election it’s hard to tell who will win. And beyond that, it’s hard to forecast the asset price response. We would caution investors to be very humble with their ability to forecast the election outcome,” BlackRock global chief investment strategist Mike Pyle said on Yahoo Finance’s The First Trade.

Democratic presidential candidate Sen. Elizabeth Warren, D-Mass., speaks during a Democratic presidential primary debate hosted by CNN and The New York Times at Otterbein University, Tuesday, Oct. 15, 2019, in Westerville, Ohio. (AP Photo/John Minchillo)

As no surprise, the yawning angst among the Wall Street elite comes as Warren has ascended the Democratic primary polls and overtaken the more centrist candidate in former Vice President Joe Biden. Just this week alone, well-known financiers such as Leon Cooperman and Mark Mobius have issued warnings of a 25% stock market plunge if Warren gains the White House.

One market veteran Yahoo Finance talked with was more blunt, stating a case for a 50% market crash. The worry makes a great deal of sense, although a 50% decline in stocks seems like an absurd prediction.

Warren may not see herself as punitive toward capitalism (as she pointed out in this week’s debate), but she so often celebrates her fight against Facebook’s business practices. Warren has railed against big businesses, pushed for a wealth tax to pay for Medicare for All and other social safety net programs and tightened financial rules post Great Recession as chairman of the Congressional Oversight Panel.

But as all investors learned from the outcome of the 2016 election that saw Donald Trump shockingly win, stocks could surprise the conventionally held logic. Recall, most on Wall Street expected stocks to crater if the unpredictable Trump won — stocks since then have generally rallied amid Trump’s corporate tax cuts and fight against regulatory roadblocks.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi

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