MoneyScope Talk: Investing in a New Regime

Wow! Can you believe this? We thought we’d wake up and have a new President, but no. Instead we have … a toss-up!

You know Wall street is a place that likes to lean on history. As in: Here’s what happened in the crash of 1987, or the Persian Gulf War, or Ronald Reagan’s victory in 1980. But this time, nothing. No one has ever seen this before, uncharted waters! So in the short run, not good for Wall Street. I’ve never heard of a “confusion rally.” Or an uncertainty rally. Hard to know how Wall Street will react, but I’ll be a monkey’s uncle if stocks go to the moon over the next day or so. As they say, STAY TUNED

Perhaps even more than most Americans, Wall Streeters were following this election campaign very carefully. Although this has been a contest between two more or less centrist candidates, there are real distinctions between George W. Bush and Al Gore, especially with regard to where they come down on financial issues.

First off, let’s be clear that Wall Street won’t be unhappy with either candidate. Second, it’s hard to see how either will really move the market one way or another, especially over the long haul.

What’s important to recognize is that the president probably matters less today in terms of the economy than he did 20 years ago. Alan Greenspan, the Federal Reserve chief, arguably wields more power than the commander in chief in this arena.

Another point: government spending as a percentage of GDP is much less than it used to be. For instance, the technology sector today is much bigger and more important than, say, defense spending, which is completely dependent on government outlays.

Having said that, however, the president-elect’s policies will certainly have a significant and direct impact on various sectors of the nation’s economy and your investment portfolio. Let’s check it out.

A Bush Presidency

It’s true that CEOs and Wall Street heavy hitters prefer George W. That’s because while Gore may be business friendly (which after all is why Ralph Nader ran, right?), George W. is more business friendly.

Another point, Bush will be much more reluctant to block big mergers based on antitrust objections. So look for more big deals to go down and get approved (i.e. AOL and Time Warner.)

Here then are some sectors and specific stocks which should make out in a new Bush administration:

Oil and Gas. You can expect that the oil and natural gas businesses will be in good stead. Remember, both Bush and his running mate Dick Cheney are oil and gas guys.

Stock Picks: ExxonMobil (the big Kahuna) and Halliburton (at the very least, it’s hard to see Cheney’s alma mater getting hurt in a Bush administration.

Defense. No question that while Gore wouldn’t have seriously cut back military spending — it’s pretty bare bones right now, relatively speaking — George W. will spend billions more. That means more dollars flowing into defense contractors and aerospace companies.

Stock Picks: Northrop Grumman, Lockheed Martin, Raytheon, and Boeing.

Tobacco. Say goodbye to going after big smoke. Or, as the punsters might put it, a cloud will likely get lifted from over this business.

Stock Picks: Philip Morris, which by the way, is already up over 50 percent this year; RJR and UST.

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