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Markets will almost certainly be volatile in the days after the U.S. election, but most investors should just sit it out, and wait for relative calm.

There could, however, be profitable exceptions to this general rule – companies that were attractive anyway that become available at more attractive prices. The most likely source of these opportunities is the health care sector in the event of a Hillary Clinton victory.

For investors, there are two important historical tendencies to keep in mind when markets go insane after the vote.

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One, market direction after a U.S. election has provided no guidance as to where prices will be twelve months later as Bloomberg notes, "While the index swings an average 1.5 per cent the day after the vote, gains or losses over the first 24 hours predict the market's direction 12 months later less than half the time."

Secondly, Morgan Stanley estimates that "Divided governments … have historically only allowed about 25 per cent of campaign promises to become policy." This means that no matter what market-affecting promises a candidate has made on the campaign trail, it is unlikely they will become law.

Campaign rhetoric is maddeningly vague by tactical necessity, but Mrs. Clinton has been unusually specific about new laws limiting price increases on pharmaceuticals.

On Sept. 2, the candidate proposed a task force to monitor drug price increases and punish companies where hikes were unwarranted. Immediately after these comments, drug stocks Valeant Pharmaceuticals International, Mylan N.V. and Endo International PLC dropped 3.7 per cent, 4.9 per cent and 5.0 per cent respectively.

The likelihood of another Clinton presidency is among the main reasons the S&P Health Care index is lower by 10.2 per cent since Aug. 1. A Democratic victory Tuesday is likely to cause a further steep sell-off in the sector.

The extent of the investing opportunity will depend on how far the selling spreads beyond pharmaceuticals. New legislation is a profit risk for the entire sector, but medical equipment makers like Medtronic PLC., and medical testing specialists like Quest Diagnostics Inc., should be less affected. A big drop in those stocks, combined with a long term demographic outlook that almost guarantees rising revenue, could make them highly attractive to investors.

The stock I'll be watching most carefully on Wednesday is Stryker Corp., a maker of orthopedic devices for hip and knee replacements (among other products). In 2014, I cited expert research predicting that demand for knee replacement procedures was set to climb by 673 per cent by 2030 due to a combination of obesity and an aging population. In a slow-growth global economic environment, this kind of industry growth is almost impossible to find, providing Stryker with outsized growth potential.

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A Donald Trump victory would also cause market volatility but to me, the investment implications are less clear. Mr. Trump is loathed by the Democrats and does not enjoy strong support within his own party. The odds of walling off Mexico or passing wide reaching legislation – like repealing NAFTA – through Congress seem extremely low. Foreign policy is another, terrifying matter that I'll leave for other sections of the paper but a cynic, not me of course, might suggest buying defense stocks.

The first Obama administration reaffirmed the precedent that, no matter how much excitement or vitriol accompanies an election win, actual governance is a long slog where an adversarial system dictates that anything beyond incremental progress in any direction is almost impossible. Investors should ensure they don't overreact in their portfolios to any election result.

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