One of the skills required to beating the stock market is having the vision to see what will likely happen next and not to focus on what already has. Generally, current market performance reflects what investors believe market conditions will look like six months from now.

One of my favorite pastimes is to discuss current events with fellow adviser Aaron Pickert and develop theories about how these events will play out in the market. During one of these recent conversations Aaron asked a question that took me aback a little bit. He asked, “What companies win in a socialistic America?”

As much as I hate to admit it, the question is a valid one from an investment standpoint. In a capitalistic society, competition and innovation drive economic decisions, and merit determines success or failure. In this system an investor is looking for the companies that can produce the best product or service at the cheapest price because those are the companies most likely to succeed. However, in a socialistic system other factors such as how connected they are to governmental leaders, what the demographic makeup of the company is, and where they fall on the ideological spectrum all become just as important to their success as their ability to “build a better mousetrap.”

This discussion would of course imply that we both believe a blue wave is likely in the upcoming national election. While I will be the first to admit our news cycle moves at a blistering pace and anything can happen over the next several months, I do believe if the election happened tomorrow Democrats would likely win both the Senate and the White House.

While Democrats tend to be more supportive of governmental intervention in our economy, the question of investing under socialism is almost as valid regardless of who wins in November. Whether it be under the administrations of Presidents Clinton, Bush, Obama or Trump, crony capitalism has thrived for decades and will likely continue moving forward.

All one must do is look at the recent spike in value of Kodak stock to understand the threat that exists when government and corporations get in bed with one another. Last week Kodak announced it had been awarded a $765 million loan from the government to help make drug ingredients. This surprise announcement sent Kodak stock up as much as 2,757%. However unusually high amounts of Kodak stock trading the day before the announcement have sparked an SEC investigation to determine who might have been involved in insider trading.

It is this unholy alliance between government and corporate America that has fueled much of our political unrest and the call for socialism. The popularity of politicians like Bernie Sanders and AOC is a direct result of people feeling powerless in a system perceived to be rigged. Ironically, their solution is to give more power over the economy to the government. In my personal opinion this will only exacerbate the problems we now face.

However, to go back to the original question of who wins and who loses in a socialistic America, I believe it’s fairly obvious to say that those who would be helped by a green new deal, like alternative energy and technology companies, could be some of the biggest winners. On the other hand, since Medicare for all would likely be part of this systemic change, those in the health-care industry such as pharmaceutical manufacturers and health-care providers could see major reductions to their profit margins.

It is a relative certainty that companies in specific industries would be impacted by a shift to socialism. Scarier however, is the fact companies within the same industry could see varying levels of success based only on the ideology they subscribe to. That’s why I don’t believe it’s a coincidence that so many companies connected to professional sports, big tech and social media have embraced leftist talking points recently. I believe they see the direction the country is moving and want to be on the side of those making the rules.

While I hope capitalism’s best days are not behind us, I believe investing should be done based on what we believe will happen, not what we hope happens. The coming months should provide us a good window on what the longer term economic future holds.