10/2/2012 6:50 PM ET|
Obama or Romney: Place your bets
Exchange-traded funds offer a way for investors to bet on the impact of almost anything, including the outcome of the presidential race. Here are a few ideas for each contender.
Investors' love affair with exchange-traded funds seems almost unquenchable. Even in the midst of the recent stock market rally, they have been dumping actively managed mutual funds and snapping up ETFs instead, according to a recent series of data releases from tracking firm Lipper. In response, issuers are flooding the market with new products on an almost-daily basis -- there seems no end to the myriad ways one can slice and dice the universe of publicly traded companies in order to bring yet another flavor of new ETF to the market -- and providers like Charles Schwab (SCHW) are slashing costs to make them even more appealing.
Little wonder, then, that pundits of all kinds are devising just as many ways to use ETFs to explore various investment themes. Want to know the best ETFs to obtain high yields from overseas stocks? To get the maximum exposure to Apple's (AAPL) stock price movements? To play rising gold prices? There are at least a half-dozen options -- and twice the number of ETF analysts eager to tell you all about their relative merits.
So, now that we have only five weeks to go before the presidential election finally takes place (and the hapless residents of "swing" states can call their lives their own again after being bombarded with political ads of all stripes for the last year or so), are there ETFs to pick if you believe one party or another will win the race?
Absolutely, says ETF analyst Todd Rosenbluth at S&P Capital IQ. And those options go far beyond simply going long the Standard & Poor's 500 Index ($INX) if you believe that President Barack Obama will be re-elected. (Historically, the index has generated higher returns under Democratic presidents than under their Republican counterparts -- and yes, that may well be more a matter of coincidence than causation, but that never stopped investors from jumping aboard what they thought was a trend -- just think of the whole debate over the stock market's prospects and hemlines, or the outcome of the Super Bowl every January.)
Some of the suggestions from S&P Capital IQ about sector ETFs are fairly easy to anticipate and understand. For instance, health care. Hospitals may well benefit from a boom in the ranks of those with medical insurance -- they will no longer have to foot the bill for treating uninsured patients who show up in emergency rooms with non-emergencies like the flu. Pharmaceutical companies that specialize in generic or lower-cost medications may also benefit, S&P Capital IQ concludes. The ETF to own? Well, the largest is the Health Care Select SPDR (XLV), which has big positions in Johnson & Johnson (JNJ) and Abbott Labs (ABT) -- both of which S&P Capital IQ believes are undervalued, high-quality stocks.
Equally unsurprising is the notion that the financial services sector would fare better under the hands-off approach of a Romney administration. That election outcome would mean a new team of regulators -- and a high probability of a far more lax interpretation of some of the laws passed in the wake of the financial crisis, such as the Dodd-Frank Act. So if you think Romney has the edge, S&P Capital IQ suggests tilting in favor of ETFs like the iShares S&P Global Financials Sector Index Fund (IXG), which has significant holdings of many large financial institutions, including those that have complained that Dodd-Frank's provisions are a major head wind to profits.
A few other ideas are somewhat less obvious. For instance, S&P Capital IQ suggests that telecom services stocks may thrive under Obama, who has been willing to help carriers expand their broadband networks, while transportation stocks could benefit from a Romney administration that encourages the development of shale oil-and-gas reserves and that reduces regulation of the coal industry. Railways, for instance, ship coal as well as the pipe and other construction materials required by the energy industry seeking to extract reserves from shale deposits.
Sadly, as with so much else in politics, there's little way to hedge your bets here. S&P Capital IQ concludes that the sectors helped by one party's victory at the polls will be hurt by the triumph of that party's adversaries. Experts say it's largely a zero-sum game -- and that makes it riskier to try to play.
True, you can watch the polls and try to play the odds, but you might be just as successful betting outright on the triumph of one candidate or another on Intrade. Moreover, whether the Obama administration is reinstated for another four years or Romney's team takes power, the odds are that their policies, as they take shape, will have an impact on stock performance (as opposed to market sentiment) only over the longer haul.
The scenario under which we all win? When the verdict is in, the dust has settled, and Congress can get back to crafting some kind of solution -- however temporary -- to the looming "fiscal cliff." Removing uncertainty and nervousness is the best possible outcome of this election for investors of all political stripes.
More from The Fiscal Times:
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Thank God that I have decent common sense Democrats as friends if not I would believe that the future of the Democratic party is doomed. I left the Democratic Party when I found out that intimidation was used , meaning if you don't think like me, you are no good in fact you are stupid. The tendency of some" Democrats" to look at the world from a corner instead of getting a panoramic view is pitiful for it narrows their perception and understanding of the world. These so called "Democrats" are an embarrasment for the real Democratic person.
They attempt to silence anyone who does not think like they do. They are afraid to check for example different TV stations for they might hear something bad about their candidate. If they hear that their candidate did or appear to do something wrong, instead of searching for the truth, they try to hide it, for it can't be even if the truth hits them in their face . For ex: John Edwards, handsome charming appeared so righteous and was the favorite of many people on both parties. Everybody knows what happened, he betrayed no only his wife who had Cancer, betrayed his best friend for he paid him to claim that his lovechild was his. His friend a very faithful follower believed in Edwards, thougth of him as a true leader, Edwards also betrayed his party and the nation for he tried to fool everyone.
Placing your hand in front of your eyes doesn't make the sun dissapear and regardless how much you try to convince others that the sun dissapeared, when you move your hand, there it is!
All TV stations are Bias, some more than others but to regard someone as stupid for watching several stations including FOX to compare coverage says more about your limited thinking, than anything else. In fact it makes me wonde,r what are you afraid of if you are so sure that your candidate is a good one. Anyway and this is directed to emerald bechman, last time I look outside and talked to people was obvious this is still America, the land of the free. Please continue with your limited understanding of reality by what you wrote, probably you deserve it.
My apologies to everyone, I previously said I didn't like Romneys personality comparing him to a cold fish, tonight he proved me wrong.
I said previously that Romney lacked personality. Tonight he showed lots of personality,acted presidential and spoke with conviction. I felt sorry for President Obama he couldnn't look at Romney straight in the eyes and at times seemed to feel quite uncomfortable for he knew what he was saying about Romney were lies. Romney confronted President Obama with the truth.
I went browsing through CNN, MSNBC and Fox and the concensus groups they had were very much in accord, which is unusual but proves that reasonable people tend to be fair and that most American excepts for fanatics tend to be fair.
To: Trump this joker and Fronkie: Where are you getting your reports? Did you watch the Debate tonight. He who runs on lies is soon caught in his own net.
Trump and Fronkie can you tell how many coal miners have lost their job since President Obama took office? Obstruction for oil drigging how many people, sorry the Bush excuse no longer cuts it. It takes courage to accept a truth and it is not a matter of winning or losing but looking at details with fairness.
Well I am pleased with what Romney had to say. He was in line with all his answers and he left Obama at the starting line. Obama said he would not run for a second term if he fell behind WELL! He has just about killed our Country and the dem-o-rats have said no to GOD and us who call ourselves Christians by the three votes they took at the dem- convention and then they lied and said it passed so GOD could be mentioned. People will one day know the truth "every knee will bow"
Pick the way you wish to enter the 2nd great depression and choose a candidate. Romney to do it via massive cuts or Obama via spending us into oblivion.
The debt is real and there is no magic fix.
Which Mitt Romney is going to show up tonight? The one who wants to be the president of only 53% of americans, who talks one thing behind closed doors when in the company of his millionaire donors, the Romney who once in public only talks about that that the masses want to hear from him, or a third and mutante Romney who were put together in a very short noticed to conquer the hearts and souls of the
very same people He doesn't care about it?
Making fun of the teleprompter. How original. I'm surprised you did not use the term "main stream media" then we would really know that you cannot make an informed decision about who to vote for without the help of the "rush limbaugh" show.
Go straight ticket vote in November so you can feel that you apart of the club. You will really help move the country forward.
Romney uses a teleprompter as well by the way.
It's ok with these Republican Fools that Millionaires are collecting unemployment and getting Food Stamps.
When our Good White Republican Folks were trying to convince people that only Blacks and Latinos were receiving payments and stamps it was wrong. Where are you indignant folks now..........why aren't my Good White Folks screaming about that.
Romney is going to Flip Flop his way all the way through these debates so start counting........he is going to do the same thing he always does.....say what he thinks will get him elected.
Zingers don't mean a damn thing America wants Facts.
Well Romney said it the best “ I don’t care for the 47% of Americans that need help”. Thanks to yesterday’s ariticle pointing out one major flaw, that millionairs are on wellfair and collecting food stamps. “maybe you rich people who make under $5MM, need to think, your part of his 47%”
REPUBLICANS are working for those who live off and take advantage of the US Government... IF YOU'RE ON WELFARE, MEDICARE, OR MEDICAID... THANK AND VOTE REPUBLICAN!!!
I just read a comment about "you rich republicans". Sorry I didn't know if to laugh or cry. Wealth is one thing, ideals are another. I grew up in a home where I was reared by my mother and grandmother. My mother lost her job and for three months we had lots of difficulty, sometimes I was the only one who had a decent food intake. A very difficult situation. She was able to get a job as a telephone operator and my grandma started teaching piano lessons . Our situation improved and I never heard a word coming from my mother's mouth blaming people who were in better shape than we were. She had a phylosophy, that you can't count on tomorrow and need to prepare in case of an emergency. She said if you earn ten dollars, you take 2 dollars, if you can and save it and before you know you will have a nice amount of money saved. Always pay your bills first, always have a budget. That philosophy helped her weather the three months she was unemployed.
I live in an old midclass neighborhood, nothing fancy.. Two months ago a middle age man came to my house and was complaining about how the financial situation was, that he was receiving assistance and food stamps and offered to do some menial jobs and wanted to be paid in cash. O.K by me if this would help him. He did a fairly good job. as he finished,. he asked if he could have water and followed me to the kitchen going first through the livingroom. I couldn't believe his comments."Is that your refrigerator ? mine is bigger . At the living room , stated that my TV set (20inch regular old set) was oudated that he had a wall to wall panoramic TV. This is the man who gets food stamps, complains about his finances and gets assistance plus works for cash. Do you think that I will help him again?
President Obama and some in his administration openly backed the accupying movement. The occupiers by the way had with them IPads, computers, fancy telephones-poor? . At their Internet site I asked what was their movement about. To make it short the man who replied indiacted that they don't believe in private property, I ceased to listen right there, I looked at his Ipad and my thought was well since that is public property I can go there and take it away from you, why should you have it. I know I can't afford one. So, wealthy republicans?
To be arepublican you don't have to be rich just have the hope that you will achieve your dreams by your own means as much as possible. To be a Democrat that doesn't mean that you are poor.
I sure do miss Pres. Reagan! WELL I would have never though I would have even missed Jimmy Carter, a little? I would rather have a little than nothing!
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