Technology stocks have been one of the best performing sectors in 2020.
The bad news: both presidential candidates have problems with the large tech companies, which could lead to changes and break-ups.
What A Trump Win Means For Tech
President Donald Trump has been vocal of his dislike of Facebook Inc. FB and Twitter Inc. TWTR. Both companies are under subpoenas by Republicans connected with the way they handle censorship on social media.
Alphabet Inc. GOOG GOOGL unit Google is also under investigation by the Department of Justice for anticompetitive behaviors.
A win by Trump could continue to put pressure on large technology companies, especially those associated with China.
Shares of Tencent Holdings TCEHY hit new 52-week highs this week, but have been the target of Trump’s attack on Chinese tech companies. Tencent is the owner of Riot Games and the partial owner of Epic Games.
Trump has cracked down on Chinese ownership of U.S. user data, which could extend to video games.
Related Link: Stock Wars: Facebook Vs. Twitter
What A Biden Win Means For Tech Stocks
Democratic former Vice President Joe Biden is more moderate than other Democratic presidential candidates who ran this year. He has shown support for regulating the industry more, and has not been a fan of Facebook's and Google's political advertising policies.
Large technology companies could get a boost from a Biden win, with better relations with China and the removal of tariffs expected, which could help with exports and partnerships.
Venture Capitalist Bradley Tusk said on CNBC the “danger scenario” is a Democratic sweep of the White House, House and Senate.
Biden by himself isn’t bad for tech, but a Democratic-led Justice Department could be troublesome for large technology companies, Tusk said.
Tusk said Democrats would push to repeal Section 230, which has protected Twitter and Facebook in controlling the content they post.
Some Republicans have also shown support for this measure, which could mean it is bad for large tech under either presidency.
Apple Inc. AAPL and Microsoft Corp. MSFT aren’t mentioned as often when politicians discuss breaking up large tech companies.
It might be best to avoid big technology altogether, as both candidates have issues with some of the largest companies in the sector. Add in huge valuations, and large tech could be a sector to avoid.
Investors could consider investing in the Pro Shares S&P 500 Ex-Technology ETF SPXT, which ignores the sector.
Another option could be to invest in technology ETFs that favor mid-cap or small cap stocks like the SPDR FactSet Innovative Technology ETF XITK or the SPDR S&P Internet ETF XWEB.
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