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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

 

If some of you remember we went through this before when Bush 39 left office all of Washington was bored and thought that change would do us good .. So the country elected Clinton and in his 2 terms he left of train wreck of irresponsible funding cuts in order to claim that he had a balanced budget. When Bush 41 took office he was handed a recession and a pile of problems in regards to CIA, NSA, FBI, NASA and the entire military. There are many things that Bush/Cheney have done but we do not see them unless we look at high level technology and our increased committment to the security of this nation. I do not think big business will allow the election of a Democratic candidate because there is so much more that we will see that is detrimental. First of all, Obama will need years to understand the technology and will never be the equal of Cheney or Bush for that matter .. secondly there was a photo op of the last election featuring Kerry on a 10 speed and if you looked real close at the chain and the gear selection it was not even in the right place .. staged to the max. indicative of an empty suit. Did you know that Obama smokes cigarettes? He wears tank top undershirts? This is a professional ? I say no .. A business man that was about to run this country would have a professional appearance .. Just look at the two men in contrast and get serious

I would just like one Democrat to admit they control congress.  George Bush, as inept as he may be, does not have the power to make all of the bad decisions that have been made.  Our founding fathers created a 3 branch system to provide checks and balances so that no one branch could "run" the country.  I do think George Bush is an idiot, but he is not fully responsible.

Gas prices are high because demand for oil is up due to emerging markets (China and India).

The Democrats in Congress will not allow us to drill for more oil or build refineries.  That my friends is why we are paying more for gas today.  The long term solution is alternative energy and it is coming.  

We can point fingers all we want, but this is our baby (it might be an ugly baby) but it's ours.  We need to start at the local level, then state, then Federal and get some people involved in government who care more about their country than their pocket books.

I am a Republican and here is why:

I work hard for my money and I do not appreciate the Democrats philosophy that I should give my money to the government because they know best how to use it and that they give it to those who do not work to keep things "fair".

The solution is not to tax business until they can no longer afford to hire middle class employees.

Here are some solutions:

Energy Independance-drilling, more refineries, nuclear power, solar etc

Tax Cuts to help the economy. Fiscal responsibility-Less government spending

National Security-Keep the war in Iraq rather than Los Angeles, Chicago, New York.  Finish what we started-preserve, protect, and defend our freedom. I don't like that we are there, but to let the terrorists win would give them way too much confidence.

Healthcare-a free market solution - not substandard socialized medicine

Private retirement funds.

Let's get the government out of the way so smart, everyday Americans like you and I can so we can enjoy the great gift of freedom that the US offers.  We all won the lottery when we were born in this great country.  If you don't believe me, go live abroad for a year or two.

We have some work to do.

I will not vote for a man who refuses to hold his hand over his heart during the pledge or wear a flag pin.  Obama has done both.  He also has some very poor judgement in the people he calls mentors over the last 20 years (Rev Wright, Bill Ayers-bombed the pentagon)  He has no experience.

I think McCain is a genuinely good guy-not my first choice (where's Colin Powell).

The president only has so much power any way.  

Don't give up on the American Dream

Shameful!  People like to pontificate about George Bush and how he is a liar--as if they have some great insight on what he went through to make the decisions.  It is easy to be a Monday morning quarterback  They conveniently ignore 9/11 and the dangers in our world.   I have been in the military for 33 years and have been deployed to the middle east 4 times.  The danger is real. They tend to forget globalization and the rise of China and India and the emerging countries' need for oil and commodities that have driven up prices.  Some have turned a blind eye to people in Congress that have not allowed needed oil drilling in our own country.

You know what, if Obama wins, majority of the people that's backing him think he is really for a change, guess what Good Luck. I mean right now Democrats controlled both houses and yet nothing hardly happens! I agree with Ron B. about Bush. However, I do believed McCain is different from Bush. In military, (I am a retired one... 30 years)  if you are a straight shooter meaning you tell like it is whatever the consequences! Finally, Dirty Dave might be on to something... I am an asian american and most definitely will vote for the straight shooter!

To Ron B,

This country was founded on the exact opposite principles of what Obama espouses. There is no way that the economic, feel good policies ala Jimmy Carter are going to fix anything.  I am deeply concerned about a presidential contender, from America, that says punish the little guy that has saved and invested and now say I am going to take more of it.  We are not a country of dependent, whining, give up attitude people, but if you punish good behavior, you will get more bad behavior. Whatever happened to prospering from your own hard work, risk taking etc.  I am not hopeful for this country's future, when the masses no longer understand our founding principles.

God help us all.

If Obama wins, we loose....it's as simple as that.  Not because he is black, because he is clueless and believes in socialism above freedom of choice.  

Without being too offensive, it is truly amazing how so many people believe that everyone should have a handout.  This mentality, perpetuated by liberal politiicians, will destroy this country.  What ever happened to the old adage, "You don't get something for nothing"?  More government, more social programs = more taxes and fewer incentives.

If Obama is elected, I fear we're in big trouble...

this message is for ron b. you say bush is a idiot? yes you may be right about that, but does that make is right to vote for obama? not all rep are bad. one thing i don't like about obama is he wants to incress capital gains tax from 15% to 25%. the money you make off your home should be yours not his. he want's to make sure all his bros get a home on your money. i don't know about you, but i have worked hard all my life to get what i have and i will not give it up to someone who just wants to set around and get something for free. make them work just like we have too. you think taxes are high now, just wait and see what happens if he gets in there. keep more of your money in your pocket vote rep.

I love how you Republicans blame the Democrats for your failures. Carter was not a great president but after the wage and price controls of Nixon and forgetful years of Ford, he was left with the high inflation and interest rates needed to staighten out the economy. He did appoint the Fed chairman responsible for slaying the inflation and interest rate dragon. As much as you like to credit Reagan for this, he was just a bumbling passenger along for the ride!

What is any candidate doing about oil pricing.  This is a primary factor of our price increase in food and other goods.  

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