Wall Street hates Democrats, and the markets will do better if the next president is a Republican. Or so goes conventional wisdom. That's hogwash, says Robert Froehlich, chief investment strategist at DWS Investments, who states that markets historically have been up more under Democratic administrations than Republican ones. And he believes that the markets will rally no matter who wins in November, although certain sectors could do better depending on whether Democratic candidate Barack Obama or Republican standard bearer John McCain gets the nod.

For starters, Froehlich believes the markets will head north (to whatever degree) in a relief rally after the election because the uncertainty surrounding its outcome will be removed. From there, investors will need to be selective.

His so-called "Blue State Portfolio" for an Obama Administration would overweight the alternative energy, steel, paper, and automotive industries. The first choice seems obvious given Obama desire to make alternative energy development one his presidential legacies. According to Froehlich, that means investors should load up on wind, solar and environmental clean-up companies.

As for Froehlich's belief that Obama could be a friend to the Old Economy, that's based on Obama's pledge to strictly enforce our current trade treaties and tariffs and to enlist the help of the World Trade Organization to put the hammer down on foreign governments that subsidize their domestic industries, a move Froehlich says could benefit the domestic paper and steel industries.

Finally, Obama could boost Detroit with his suggestions to provide loan guarantees or subsidies (would the WTO clamp down on those, too?) for the auto industry. Although that's not part of Obama's official platform, the rumor factor could be enough to boost auto-related stocks, Froehlich says.

Regarding the "Red State Portfolio" in the event of a McCain victory, Froehlich would overweight the oil, financial and discount retailer sectors. Given that the mantra "Drill, baby, drill" became a Republican slogan this summer, Big Oil seems a likely beneficiary under McCain. In particular, says Froehlich, McCain's vows to shield oil companies against windfall profit taxes and to make sure they keep their tax deductions for domestic production would be significant positives, as would his call to fight any outright elimination of foreign tax credits.

Froehlich believes that McCain's stated intentions to maintain the Bush administration tax cuts-including reduced rates on dividends, long-term capital gains and estate taxes-would foster a sense that people will save and invest more. In theory, that could benefit financials.

And discount retailers, who rely on price mark-ups on goods made cheaply overseas, could benefit from McCain's strong free-trade bent versus Obama's willingness to enforce trade tariffs.

In a world of myriad investing philosophies, add color-coded investing to the list of options.