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Making money with an Obama portfolio

Posted Jun 06 2008, 11:18 AM by Robert Walberg
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With Sen. Hillary Clinton expected to officially concede on Saturday, Sen. Barack Obama has finally secured his party's nomination for president.  As such, the time has come for investors to start thinking about how the November election might impact their portfolios. In what is sure to trigger a response from many of you, it is my belief that Obama will win and win big. Before I get to what stocks might benefit from an Obama presidency, let's take a look at why he will win.  

First and foremost my prediction has nothing to do with party preference or policy issues.  It has to do with simple math and if you are into electoral math, as I am, you need to take a look at Web site FiveThirtyEight.com.  While the site suggests that the race will be extremely close, similar to the past two presidential elections, if you dig a little deeper you see that if the Obama can increase the turnout of young and African-American voters by as little as 20% from the totals achieve last election, he wins handily.  Based on the huge turnout effort in the primaries, Obama's ability to raise money and the strength of his campaign team, I think it's very likely he will get the turnout necessary to take at least seven of the 10-12 swing states, giving him more than 300 electoral votes -- well above the 270 needed to win the White House.

Okay, enough of why Obama will win. How might his victory impact your portfolio?  First things first: an Obama win could trigger a end-of-year sell-off in stocks.  Historically, the S&P 500 rallies in election years with an average gain of over 12% -- with most of that gain traditionally coming in the last six months. So why will the market's intiail reaction to an Obama presidency be to sell-off?  If elected, Obama plans to raise the capital gains tax to 25% from 15%. Fear of a higher tax on gains could trigger investors to take profits in 2008 to avoid the higher tax.

That concern aside, there are still going to be a number of sectors that get a boost from an Obama victory. Based on his stated policy proposals, some industries poised to benefit include alternative energy, generic drugs, education financing, general construction, and technology.  Among the losers will be health care (HMOs, big pharma and hospitals), defense and banking (increased regulation).  

Based on these assumptions, it's time to pick my Obama portfolio. So if you think, as I do, that Obama will win, here are 10 stocks to buy now:  EMCOR, Sterling Construction, Caterpillar, Barr Labs, Forest Labs, Fannie Mae, Freddie Mac, First Solar, MEMC Electronics and Corning.

(Disclosure: Some of my clients hold positions in EME, STRL, BRL and WFR.)

Comments

 

This is, of course, relative, because with the almost-certain tax increases no company will do that well in an Obama presidency.

the year end sell off will only be the beginning.  the great socieity, entitlement

dependent, high taxation, weak national defense joke of a country we

will become under obama and the democratic conrolled congress will kill

business conditions and the investor class, which is, of course, their goal.

time to move assests off shore and look for another bastion of capitalism

in the world.

Alas, you forget that a large portion of the hispanic vote will go to McCain.  Hispanics, for the most part, will not vote for an African-American.  I live in Southerna California and do business and with and live with the Hispanic population and from my dealings with friends and customers I've been told by my friends that they will not vote for Obama.  McCain is an open borders guy unlike the conservatives in his party and being from Arizona he knows how to court the all important Hispanic vote.  I'm no pollster and this is not scientific, but from my dealings in the Hispanic community I think this is going to be very crucial in the upcoming presidential election.

I hope Obama does become our next president. We don't want another republ;ican after all the lies of Bush and how he is screwing up this country. McCain is another liar who wants to keep this war going. He's an idiot. We should have NEVER been at war because Bush lied to get us there. Bush has screwed up everything this country stands for and Obama is going to straighten it out. it's going to take awhile but Obama is going to do the job. Why is Bush still in office? He lied to us all about the war and Bush doesn't care. Haven't you congressman have any balls top do anything about it? We are sick of George Bush and his lies and evil ways. Bush is a DISGRACE to this country and the American people. Bush should be locked up for all the wrong he has done. Bush is an idiot. We want our America back before Bush destroys it. Vote for Obama in November, and make sure your vote is counted, because the way we vote in this country is crooked. That's how Bush got in, in the first place. Bush is a liar and a cheater and I hope he pays for all the wrong he has done.

And what will your portfolio be if McCain wins?

What if McCain wins, then what do you suggest we do ?

There is a gossip here in South Florida Condo Canyon that Billary will accept the vice-presidential nomination, but not from the Democrats, but with the Republicans.

Don't forget that Billary was a Republican in college !!!

Could not have said it better. The entitlement class will rule with everybody looking for a hand out. I pity young middle class couples who work and will have to endure Obama and his mentally of high taxes to support all the loafers that will put him in office. Socialism will rule and this country that is slipping everyday will be in shambles in four years. People just don't understand what is coming.

A 20% increase in anything is huge! The author of this piece acts as though it"s no big deal, it's a huge deal. Remember you are dealing with the young vote here who has historically been courted by both parties when seen as the great decider and each election they are stood up like a jilted bride or groom. The Dems need only look back at 2004 and the great 'get out the vote' effort by it's hollywood types, a fantastic failure. Why? Cuz hey dude, my frat brothers are havin a kick A## party!

The race card is alive and well.  Hispanics don't vote black, Asians don't vote black and baby bommers don't vote black.  I know, I know, the electoral college votes for the president.  In any event this will be one lively race.

Just in case, I 'm all ready to move off shore  to a Island with everything I have and retire for a while till this all settles, maybe come back in about 6 years

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