10/9/2012 7:24 PM ET|
Stocks for an Obama or Romney win
Stocks have risen sharply during the president's first term, but experts say big banks and several other sectors will do even better if the challenger wins. Here's where to place your bets.
By now, we all know Big Bird's fate may hang on the elections, since Mitt Romney said during the first presidential debate that he'd pull the plug on PBS funding.
But what about Big Energy and Big Banks? And little companies of all stripes?
Winners all, if Romney is the victor.
In contrast, a second term for President Barack Obama would favor health insurance companies, hospitals and green energy businesses, among others. And the stock market overall has gained strongly since Obama took the helm, with the Standard & Poor's 500 Index ($INX) up 73%. Historically, stocks overall and the economy do better under Democrats.
Those are the key take-aways on how the election outcome might help -- or hit -- select stocks and sectors, according to more than a half-dozen money managers, analysts and political experts I spoke with recently.
Let's take a closer look and how stocks might move, depending on who wins.
Big banks expect big gains under Romney
A good way to figure out what's going on in any situation is to follow the money. With banks, the money trail tells us lenders think they'll do much better under Romney. How so? In campaign contributions, banks favor Romney by a ratio of about 2-to-1, points out Daniel Dorn, an associate professor at Drexel University's LeBow College of Business. And this isn't just business as usual. Last election, the split was more even, according to OpenSecrets.org, which tracks campaign contributions. (Find out more on financial giving on OpenSecrets.org.)
Why are banks with Romney? For two main reasons, says Anton Schutz, of the Burnham Financial Industries (BURFX) fund, which has outperformed competitors over the past five years, according to Morningstar.
First, a Romney victory would boost business confidence, says Schutz. That should help the economy, which in turn helps banks. This scenario would be particularly good for the big banks with capital market operations doing things like issuing stock and debt for companies and managing initial public offerings.
Top on the list: Banks such as Goldman Sachs (GS), JPMorgan Chase (JPM) and Bank of America (BAC), all of which have contributed to the Romney campaign. They've given three or four times as much money to Romney as to Obama. Citigroup (C) and Morgan Stanley (MS) would also benefit, since they, too, have big capital market operations, says Schutz.
Second, Romney would help banks by repealing most or all of the Dodd-Frank financial reform legislation, believes Schutz. Indeed, during the debate last week, Romney confirmed he would "repeal and replace" Dodd-Frank regulations on banks. He's also said he'd roll back the Sarbanes-Oxley reform legislation passed in 2002, after the Enron and WorldCom meltdowns.
New regulations have been particularly burdensome for smaller regional banks, says the money manager. So they'd see some good upside, he says.
Among regional banks, Morningstar has four-star ratings (of a possible five) on the following:
- City National (CYN), which focuses on serving the wealthy, primarily in Los Angeles. Wealthy clients are a plus, because they default less on loans, and they flood the bank with cheap deposits, says Morningstar analyst Michael Kon. The bank has also established a presence in New York City, and it recently expanded in San Diego and Nevada by purchasing failed banks.
- Comerica (CMA), a Michigan-based bank that is expanding into California, Texas and Florida. Given its exposure to Michigan, which was hit especially hard by the recession, Comerica has had a lot of bad loans. But Morningstar analyst Maclovio Piña thinks that the bank has turned the corner on bad loans and that it has adequate capital to deal with any more that surface.
- Wells Fargo (WFC), a superregional bank that is a favorite of Warren Buffett for its high-quality management. By avoiding the big mistakes other banks made during the credit bubble, Wells Fargo has positioned itself well to grow as the economy recovers, says Morningstar analyst Jim Sinegal. Following the 2008 purchase of Wachovia, Wells Fargo is now one of the four largest banks in the United States. It still has plenty of room to grow by cross-selling services to Wachovia customers.
Even if Romney fails to repeal Dodd-Frank regulations altogether, a GOP victory would boost sentiment toward banks, pushing their shares higher, believes Randy McLaughlin, of Baird Investment Management. "Banks are dirt cheap," he says, singling out JPMorgan Chase and PNC Financial Services Group (PNC).
Another company that would benefit if Romney wins is the student lender Sallie Mae, formally known as SLM (SLM), says Jason Benowitz, a co-manager of the Roosevelt Multi-Cap Fund (BULLX). A Romney victory would likely reduce the role of the federal government in student lending. "Then we would see an expansion of private education lending, and SLM is the largest private education lender," says Benowitz.
VIDEO ON MSN MONEY
You had that from January 5th 2007 until January of 2011 and what did we accomplish? $16 trillion dollar deficit, 5 million loss in employed citizens, 43 months of 8.1% or higher unemployment, 23 million unemployed or underemployed citizens, 12 million illegal immigrants, and a health care bill "we have to pass to find out what is inside". Nice. Yet we can't be bothered to balance the budget or even pass one? The whole lot of them should be tossed in the next two election cycles (both parties) and new blood hired.
What's best for them? How about legislators who work for us for a change instead of for themselves?
Economy has done better historically under Democrats....................
Where do you people get your information ?
Breaking News - CNN, MSNBC, NBC and CBS have not yet confirmed the story, but it is believed by many that George W Bush is not running for President.
Why is the perception that Republicans are the main culprits of war mongering?
World War 1 - President Woodrow Wilson, Democrat
World War 2 - President Franklin Roosevelt, Democrat
Korean War - President Harry S. Truman, Democrat
Viet Nam - President John F. Kennedy, Democrat - Lyndon Johnson, Democrat
Desert Storm - President George H. Bush, Republican
Iraq - President George W. Bush, Republican
Washington Examiner -
Media Loved Obama to Death.
On Sept. 12, the day after mobs ransacked American embassies, burned the flag and Obama in effigy, and killed one Marine, two Navy SEALs, and one ambassador, NBC's Chuck Todd took to the air almost in shock and seemingly tearful, because Romney critiqued an official in Cairo who apologized for provoking the riots, citing a barely-seen YouTube video as the pretext for the violence. Voice shaking, he channeled the shock on the part of the White House (which later itself condemned the apology).
For days after, Romney's "mistake" was the story. On Sunday, after a week in which Obama was burned in effigy on several continents and his Middle Eastern policy exposed as a failure, he lost his best (perhaps his sole) campaign issue, and questions were raised about criminal negligence. But Chris Cillizza of the Washington Post said that Mitt Romney had had "the worst week in Washington." Obama's failures had turned out to hurt Romney, most of the press corps agreed.
Obama had seen that his friends would protect him, and so he believed he could mail it in Wednesday, but this was the venue that could not be spun. No filter. No edits. No choosing what to put in or leave out. No shaping of the story. Just the story itself, rolled out in real time, sans narration, before 70 million American voters, undoing six years of hype and hysterics. It revealed one small, not all that keen academic, having been inflated by the narrators beyond all recognition, dissolving before everyone's eyes.
THE MAIN STORY SHOULD BE OBAMA LIED ABOUT LIBYA!
COVER UP! AMERICAN FREEDOM AND SECURITY AS RISK!
you liberals worried about big bird and obama deathcare and
soylandra and green energy should focus on more important things!
stupid obama leeches worried about cell phones and obama money!
OBAMA hasn't brought any charges on any wall street banks or people
but he's been tough on wall street? yeah he took their money!
when Bush left office the gas costs half of what it costs today??
when Bush left office the deficit was 6 trillion less than what it was today?
when Bush left office unemployment was a little over 6%
I'll take those numbers today.
The Dow has fallen below the 20 day moving average, a move it has been trying to make since Aug 30. It has been fickle due to the Feds and the result of the debate, giving it a temporary shot in the arm. It wants to correct like it should and maybe now it has the momemtum to do so.
If thats true, it will happen just in time for the election which will not be a good sign for Obama, but will be a plus for Romney. The Trend is still a BUY, but the indicators are turning negative and of course anything can happen at any time, no guarantees of any sort.
We'll just have to see how this plays out.
Obama is leading us to a path of destruction, and another four years of Obama and American as we once knew it will not be recognized!
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Equities started the midweek affair on a rather unassuming note in the absence of market-moving news or economic releases. With those pieces missing from the equation, ... More
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