The papers and the internet are filled with recommendation for you about the “Obama Trade”. In other words, what stocks will most likely benefit from an Obama presidency.
I’ll save the linking to the 1,000 plus posts today alone. Here is a Google Search for them though….only 2.1 million hits
So, what to do? Should we sell defense stocks like Boeing (BA), Lockhead Martin (LMT) and Northrup Grumman (NOC)? Should we also sell Exxon (XOM) and Chevron (CVX) since he has tralked about taxing their “windfall profits”.
Should be be buyers of healthcare stocks like Tenent (THC), United Health (UNH) and WellPoint (WLP) since any government sponsored health plan will be a boon for their business? What about alternative energy plays like First Solar (FSLR) and Archer Daniels Midland (ADM), Obama has pledged more money for this sector after all.
What to do now? Nothing.
During the election, everything is promised to everyone by every candidate. Now reality sets in. Choices have to be made and not everything promised will be delivered. IF, Obama is truly going to be a candidate of “change” then the old political party based investing rules do not apply.
On the other hand, he may have debts to pay to those who elected him and move to satisfy those folks.
We don’t know and committing money to a certain area on a hunch of what he and the congress may actually do, is risky. There are too many factors in the price of a stock or a sector for anyone to say “x” company will for well the next 4 years. If the company is run by a dolt, does it matter who sits in the White House? If we throw billions of dollars at the ethanol industry and then a natural disaster destroys the corn crop, does the Democrat or Republican in the WH matter?
If Exxon hits a gusher and oil prices plummet, the public’s desire to spend money on alternative fuels will be eliminated.
What about 2010? 19 Senate seats (out of 100) are up for grabs. If the GOP regains control, current plans may be derailed and a new set of priorities may emerge.
What if Iran follows through will its pledge to try and wipe Israel off the map? Anyone care to wager that would not cause an instant and dramatic increase in defense spending?
Simply pick good companies trading at attractive prices. Fortunately, there are plenty of them around right now.
Disclosure (“none” means no position):Long ADM, none
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One reply on “So, The Election is Over Where to Invest”
Don’t miss the forest for the trees. Obama increases the chance of higher capital gains taxes, which automatically cuts all asset values by equal amounts. Also, we won’t know what Republicans do. If they don’t filibuster, there could be massive deficits that China and Saudi Arabia can no longer afford to subsidize due to recessions and low oil prices/production.