Reasons to Be Cheerful, One, Two, Three
Today's Financial News - Posted January 21, 2009
A grand new beginning for America? Or the funeral procession of the American Dream? The opinions diverge at the TFN editorial office. Here’s what TFN editors think the future has in store for us… and your opportunity to chime in with your own suggestions.
by J. Christoph Amberger
Baltimore—(TFN): In light of my lacking enthusiasm for the promise of the New Era, TFNeNews readers tell me I’m a “downer”.
A downer… just because I cannot see a clear upside to the current economic and political situation, either nationally or globally? In fact, doing some sector analysis as the markets plummeted yesterday, I was unable to locate any domestic industry that has a clear shot at a boom… especially if you’re tempted to take campaign promises at face value.
Not even the stand-by beneficiary of previous crises… the military-industrial sector… seems to stand a chance in the new era of universal peace that is about to descend on earth.
Especially considering that all we really have to base our educated guesses on is campaign promises.
Applying those, even the potential of private-sector healthcare and pharma—logical choices based on U.S. demographics—seems tightly capped in a universal healthcare, litigation-friendly political environment.
And counting on state road crews and their “shovel-ready” infrastructure projects to create a lasting economic recovery seems… ill-advised.
Of course, I’m only one voice at TFN. So I asked my colleagues Andrew Snyder and Laura Cadden to point out silver linings and roads paved with gold that I may have overlooked.
Andrew writes:
*** “It is difficult to have an optimistic outlook as the nation enters the new fiscal year trillions of dollars short of the amount it needs to pay its bills. It’s even harder to be optimistic when the world of corporate finance has less to do with borrowing costs and net present values than with the political connections and the ability to score a “capital infusion” from Uncle Sam. Corporate CFOs are not re-reading their economics textbooks, they are signing up for Poli-Sci classes at the local community college.
“But yesterday’s pomp and circumstance in Washington did prove one thing. The nation’s herd mentality is as strong as ever. Millions of Americans found enough of a reason to spend hours in the cold fighting a crowd to cheer as the nation gets a new CEO.
“How does that work? They despise Big Business executives and then faint at the sight of the leader of the biggest business of them all? They throw political feces when Detroit’s leaders show up in a Jetstream but hail a man that throws a $150 million party and flies around in the biggest private jet of them all?
“But even a political pessimist like myself cannot help but see the optimism radiating from the nation’s capital yesterday. Judging by the sound bites, consumer confidence is on the rise. If Obama tells these people to go out and spend, we may see a wave of buying like you cannot imagine.
“Bush is back in Texas, and to many people, that means the nation made an instant turnaround. I predict a huge wave of consumer spending in the next few months.
“It will not be spending on new cars, homes, businesses expansion or even clothing. It will be the little stuff that so many economist and analysts glance over. Walk through Wal-Mart (NYSE:WMT) or try to comprehend the amount of Obama memorabilia sold yesterday and you will know exactly what I mean.
“We already know the vast majority of the current near-trillion-dollar spending package will not be paid until 2010 or even 2011, so forget about trying to get rich off infrastructure plays.
“Invest in the companies that are raking in profits one nickel and dime at a time. Companies like Wal-Mart, Family Dollar (NYSE:FDO), McDonalds (NYSE:MCD) and Costco (NASDAQ:COST) will profit as consumer spending gets back on track.
“The folks that will open their wallets first will not be the Bentley drivers or the McMansion crowd. It will be the folks that truly feel a fifty-dollar increase in their week’s pay. These are the ones that got Obama into office and they are the ones that will spend every penny, and probably more, of what he gives them. How far will that go toward a recovery? I guess we shall see!”
*** Alright, that still was not very optimistic. But we have Laura Cadden’s belief in the inherent goodness of humankind to counterbalance our funereal outlook. Laura writes:
“Here’s a rough idea of the top trends for 2009 that I believe will hold some investment gems…
“Nuts and bolts
”The Obama Administration’s infrastructure plan could make 2009 a great year for government contractors, engineering firms, infrastructure services consultants, and construction materials suppliers.
“The future of medicine
”Four of the top-ten stocks with the biggest percentage gains in 2008 were biotechs. And the exciting advances in genetic treatments for disease will certainly benefit from any increase in government funding. These will continue to be good defensive plays in a potentially rough economic climate. So far this year, the top performers for TFN have been bio-tech plays with a stem-cell tie-in! (In case you haven’t looked at our latest report, ”Four biotechs set to soar”, please do so now!)
“Going green
“The new president’s push for green jobs could benefit solar and wind energy providers and installers.
“Minerals like lithium and nickel (for rechargeable batteries) and polysilicon (for solar panels) could see increased demand, benefiting miners and processors. I’ll have a report ready to go for you by Friday!
“Penny pinching
”Discount and lower-end retail outfits will continue to benefit in a continued recession.
“High-tech health
”As the government seeks to greatly increase its involvement with healthcare, more basic information technology needs will arise. This could equal big contracts for current providers of medical databases and software.”
Cheered yet?
Why don’t you tell us where you see opportunity in the Age of Obama… what industry your’e pinning your great expectations on… what company you believe will benefit most from the Federal gravy train.
Give us some feedback in the Comments! We’ll share the best suggestions with the TFNeNews readership tomorrow!
But in case you’d rather see our latest optimistic stock recommendation, take a look at this report we just published:
Next Article: The three best (and worst) stocks of Obama’s first 100 days
One Response to “Reasons to Be Cheerful, One, Two, Three”
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January 21st, 2009 at 5:30 pm
I agree with your assessment. However, if Obama is able to pull this rabbit out of the hat, I will be happy to declare him a genius. The fixes he is proposing didn’t work for FDR and I see no reason to expect them to work now. I know people will claim that FDRs policies got us out of the great depression but I beg to differ. World War II got us out of that mess and I would just as soon not see a repeat of that solution.