Thursday, October 04, 2012
Obama or Romney? The Debate & Election Investing
The First 2012 Presidential Debate
Mitt Romney and President Barack Obama had their first of three debates in the 2012 presidential election race to win the the White House. Romney went on the offensive with his plans while Obama missed opportunities to fight back effectively it seemed. After this first debate it looks like 1-0 for Romney in our opinion and from many others. Still there are two more debates to go and anything could happen in this very close election.
Critical Debate Investing Issues Discussed
Important investment decision issues that were debated were taxes, creating more jobs, healthcare, energy, the financial sector and Dodd-Frank financial act, along with reducing the USA's huge debt.
Investing on Who Wins the Election or Not
If you are wondering what companies to invest in based on who wins the election there are some new ideas and themes below from Motif Investing. Even if you don't think one company will benefit from who the president is, you can invest one-way or hedge your investment with Motif. Review some Motif election ideas below.
Motif Idea Theme Investing
A motif is a carefully researched and intelligently weighted portfolio of up to 30 stocks that reflect real-world trends and investment ideas. You'll get great exposure to the idea, while spreading risk. And, when you buy multiple motifs, you also get diversification across ideas. Invest in a motif as is, or customize it any way you like. Because you own each individual stock in the motif, you can add stocks, delete stocks or change their weightings.
Repeal ObamaCare Motif
The affordable care act may not be so affordable. Not everybody feels good about ObamaCare. It’s actually called the Patient Protection and Affordable Care Act of 2010. And the new sales taxes, funding cuts, and lower reimbursement rates it contains could deal a blow to large parts of the healthcare system. For example, ObamaCare imposes a 2.3% excise tax on the sales of medical devices, which could cut up to half of the profits they generate. Not surprisingly, affected companies have underperformed the S&P 500 by a wide margin. Republicans who adamantly opposed the bill are committed to repealing it. And, come November, they could be in a position to do just that.
Senior Care Motif
Feeling good about boomers’ healthcare. The 79M Baby Boomers are getting older, living longer, and they want to see the doctor. Their generation is 27% bigger than the preceding group. Not to mention rising medical costs would mean they’ll have to pay more than their parents did for similar healthcare. A longer life expectancy means they’ll also require more services like surgeries, treatments and long-term therapies for their ailing hearts, broken bones, diabetes, and other privileges of aging. With 7,000 to 10,000 Baby Boomers turning 65 each day for the next 18 years, record numbers of Americans are qualifying for Medicare. When you put it all together, providers involved in keeping the Boomers healthy could feel pretty good.
Drill Baby Drill Motif
Going home grown could be anything but crude. We’re getting closer to going deeper, right in our own backyard. According to a Gallup poll in March 2011, public support for expanding drilling here at home has reached 60%. And, all of the Republican Presidential contenders are vowing to bore into domestic drilling. The US is the world’s top oil consumer, gulping down 7B barrels per year—over half of which is imported. Yet there is an estimated 131B barrels in areas currently off limits for drilling. With as much additional oil available in the US as there is in all of Kuwait, we could free ourselves from dependence on foreign oil, just by drilling at home. That’s definitely fuel for thought.
Black Gold Motif
Demand surge outpaces production. The world runs on oil consuming 87 million barrels a day. While production is higher across the globe, new supplies can’t keep up. Over the past decade, oil consumption has grown by an average of 1.26%, while production has grown only 1.19%. And with no more than 5 million barrels a day in excess capacity almost all located in the volatile Middle East – supplies are increasingly prone to disruptions. With alternative energies not yet ready to fill in the gap, the upward pressure on oil prices is likely to continue for years to come. Since April 2002, oil prices have posted an annual compounded growth rate of 14.3%.
Shale Gas Motif
New energy from shale gas. Thanks to shale, natural gas is the new energy source of choice. It’s carbon-friendly, it’s cheap, and there’s plenty of it. Huge shale supplies—and the technology that enables us to access them—have made natural gas cheaper than ever at 75% off its peak. The US electricity industry is the biggest user of natural gas, spurring a 50% increase in natural gas’s share of the US electricity market over the past decade. Which means the possibility that natural gas may replace coal in powering American electricity is a real one. Fracking, the controversial technique that injects millions of gallons of chemical-laced water into the shale under high pressure, has provided access to reserves (inventory of producible gas) with the potential to meet US demand for decades—even centuries.
Cleantech Everywhere Motif
Green looks good to everybody now. Going green isn’t just a nice idea. It’s a phenomenon. Kids talk about it. Companies market to it. Politicians praise it. (Well, some of them do.) And that enthusiasm is driving big investments in clean technology. Worldwide, governments have adopted renewable portfolio standards and committed $68B to promote clean energy development. In the US, California has mandated that renewable sources generate one-third of its electricity by 2020. Of course, the private sector wants in on the action, too. Their investment in clean technology has ballooned to $243B. We’ve seen the future: it composts and drives a hybrid.
Too Big to Fail Motif
Bailout can make big banks bigger. Sometimes, size really does matter. During the financial crisis the US government declared that 19 financial institutions were systemically important, or “too big to fail.” And they backed it up with the $700B Troubled Assets Relief Program (TARP). As a result, those 19 institutions can now benefit from a view that they have an implicit US Government guarantee. That perception lowers their risk profile and borrowing costs, saving them an estimated $34B per year. As a result of government-sponsored consolidation, these financial Goliaths now control a full 72% of US banking, vs. 68% pre-crisis. And that’s a gigantic advantage.
Bailout-Free Banks Motif
Looking smart by shunning subprime. While many banks saw a cash cow in subprime securities, other banks either couldn't crack the market or they kept their toxic debt in check. When that market blew up, banks with smaller bets had an easier path through the financial crisis. With harder-hit banks forced to merge, declare bankrutpcy or take a piece of the notorious TARP bailout in 2008, some regional banks did just fine, thank you very much. Since TARP, these regionals have cut losses, lent more and grown their deposit bases. Larger banks, meanwhile, continue to draw scrutiny from regulators looking to minimize risks to depositors. This motif includes regional banks that didn't get too involved in subprime mortgages and didn't acces TARP bailout funds.
Housing Recovery Motif
Historic bust may lead to bargains. Be it ever so humble—well, they’ve never been quite this humble. Home prices have dropped an unprecedented 31% since late 2006. Massive existing supply, a huge inventory of foreclosed homes ready to come to market, stubborn high unemployment, rising food and gas prices, and the challenge of qualifying for a mortgage, have shaken consumer confidence and slowed any sustained turnaround. But as the economy recovers, bargain prices and record-low interest rates can tempt consumers back into the market and help home prices begin to recover. This could benefit housing stocks, many of which are down over 50% from their pre-crisis highs.
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