Wall Street Gets Its Portfolios Ready For a Clinton Win

A NUMBER of Wall Street investment houses are now telling their clients that - barring the unexpected - Democratic contender Bill Clinton will win the 1992 United States presidential election.

Moreover, the stock market appears to have already discounted any adverse impact from a Clinton victory, such as the possibility of eventually higher corporate or personal taxes, especially taxes on the well-to-do.

Case in point: An October analytical stock market guide sent to its customers by Donaldson, Lufkin & Jenrette, an investment house, concludes that "we don't think there is much chance of a Bush victory. We advised our analysts over the summer to assume that Governor Clinton would prevail and nothing has happened since to suggest otherwise." The analysis was written by Eric Miller, chief investment officer for DLJ.

Last week, Kemper Securities Inc. in Chicago, said it has changed its asset allocation for the first time in four months by recommending a reduction of cash reserves in favor of bonds. "The firm believes that market concerns over a prospective Clinton victory are overblown and provide opportunities for investors in long-term bonds," the firm noted. Investors expect Clinton to prevail

A survey of 450 investors by Fidelity Investments, a mutual fund company in Boston, found that 45 percent of the respondents expect a Clinton victory, compared to 37 percent who anticipate a Bush victory. Yet, the majority of the participants in the poll identified themselves as Republicans.

Even investor-related organizations such as the National Association of Investors Corporation, based in Royal Oak, Mich., are pointing to the substantial Clinton lead in opinion polls.

"Clinton led the polls in July, he retained his lead in August and September and he's still out front in October. His election won't put [Wall Street] in a tank. He's not a wild-eyed Bolshevik; this is a very well-prepared candidate who has hundreds of corporate executives and economists behind him," says Larry Wachtel, a vice president with Prudential Securities Inc.

Although President Bush is clearly the "candidate of choice" for much of Wall Street, Clinton has won support from a large number of prominent investment community executives, including Robert Rubin, co-chairman of Goldman Sachs, an investment house, and Roger Altman, an investment banker and former assistant Treasury secretary in the Carter administration. Winners and losers in the stock market

For the investment community, the unknown factor in a potential Clinton victory is a shift in emphasis away from the types of stocks that have been popular in the Bush years - such as defense stocks, export firms, and tobacco and consumer goods companies - to a new range of stocks that might post unique gains under a Democratic White House.

Among potential "winners" are certain health care stocks, particularly involving health maintenance organizations; construction and infrastructure-related firms; telecommunications and computer stocks; and firms linked to education.

Stocks that could run into some trouble include pharmaceutical and energy companies, except for natural gas and other environmentally "pure" energy stocks; some banks; and possibly, insurance stocks.

Such pre-election "sector" analysis is admittedly highly speculative.

What is less open to question is that the equities market tends to do better in the first year of a Democratic administration than in the first year of a Republican administration, says Dennis Jarrett, a market analyst with Kidder, Peabody & Co. The average first year market gain under Democratic presidents is around 3 percent, compared to an average market loss of about 4.3 percent under less-expansionist GOP presidents.

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