With Election Behind Us, Where Should We Invest?

The papers and the internet are filled with recommendations 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 yesterday 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), Lockheed Martin (LMT) and Northrop Grumman (NOC)? Should we also sell Exxon (XOM) and Chevron (CVX) since he has talked about taxing their "windfall profits".

Should we 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.

So, 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 anything for sure, 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 do well for 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 White House 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 with 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: Long ADM

Comments

[Robert Nabloid:]

I agree, we must not start investing PURELY because of perceived government actions. As always, individual business fundamentals will reign supreme.

I believe "change" will be much of the increase taxes and increase spending we see from many governments around the world. That's what politicians do. They promise people things and they spend money. I believe fundamental change in how government is run will not be there considering many of his insiders have been around for a while (some from corrupt GS) and some from the Clinton Administration that helped create many of our problems by designing our economy to grow solely on cheap credit. Much of this cheap credit from the last decade only masked America's problems... they have now become evident to everyone... but how can the government fix it by increasing taxes and spending more?? That isn't change.

Personally, I'd focus on industries that have a good economic outlook, regardless of who's in the white house. Then I'd look at great individual companies in that industry. It's funny how Presidents take blame and the credit for the entire economy... They only help create the situation, good or bad... They are one part of the entire picture and many forget this.

2008 Nov 06 02:14 AM

[PeteK:]

Lost & Confused before election.
More Lost & Confused after.

2008 Nov 06 05:36 AM

[Howard L Smith:]

I am looking for stock of companies that will not be impacted by this stupid "Cap and Trade" legislation!

I think that there must be some potential bif winners who will gain business as the US and Europe leaders attempt to play GOD and effectively put many companies and workers out of business.

I don't want to suffer the same fate as these congressionally imposed failures!

2008 Nov 06 11:04 AM

[PeteK:]

Mr. Sullivan,
When you talk about 2010 Senate seats, you are already showing bias.
Not good at all. Please stop that.

2008 Nov 06 11:45 PM

[SuperMike:]

Are we out of our minds investing more in weapons? We need to stop our focus overseas and get down and dirty with our at home needs. Stop the ridiculous spending on weapons and help the people that need it most now the American Middle Class. Enough already. Help the people who have funded the USA for all of its year!!! It is our turn, isn't?

2008 Nov 25 06:09 AM