Election 2012: The bottom line for your portfolio
No matter who wins in November, our advisors have you covered.
With the presidential election just a day away, the headlines are full of the latest polls, debate gaffes, and battle plans. But how will the results affect investors like you?
Four of InvestorPlace Media's top advisors sat down and discussed how the election will shape the investing landscape. Here's what they had to say:
Hilary Kramer: An Obama victory will boost health care, clean energy
Strategy: Picking growth winners in a volatile market
Her take: If Mitt Romney wins, I would look for opportunities in energy, especially U.S. drilling companies. I would expect to see much more natural gas production, boosted by the newest technologies, such as fracking.
One of my favorite plays in that space is Halliburton (HAL). Romney has also pledged to reduce the size of the federal government and lighten regulation, which means financial companies would likely benefit. Specifically, the big banks such as JPMorgan (JPM) and Citigroup (C) should do especially well. They've been struggling to comply with new financial reform laws, and some of these regulations could be rolled back under a Romney presidency.
If President Obama is re-elected, I think you have to look at hospital and health care services companies as "Obamacare" continues to be implemented more broadly. There is plenty to debate about the specifics, but the bottom line is that more people would have coverage. You'd also have to consider green energy. Companies that provide air-pollution reduction and control services should thrive as Obama continues to push for clean air and NOx emission reduction.
One name I've followed for a while is CECO Environmental (CECE), which helps companies remove airborne contaminants and pollutants from some of the largest industrial facilities in the world. Fuel Tech (FTEK) provides these services to utilities, industrial and energy companies and should thrive in a second Obama term.
Louis Navellier: A ramp into year-end -- either way
Strategy: Growth-stock investing focused on fundamentals
His take: The market is likely to do just fine no matter who is elected. While the major indices typically stumble in early October in election years, this dip is both temporary and an opportunity. In fact, about half an election year's average gains are made between the October lows and year-end. So regardless of who becomes the next president, I expect certainty to return to the market in November.
With that said, there are a few areas that will outperform depending on who sits in the Oval Office. If Mitt Romney is elected, I expect to buy more domestic energy stocks, since one of his main objectives is to create more jobs in the energy sector. If President Obama is re-elected, I expect that blue-chip companies will ramp up stock buybacks as the tax rate on dividends may increase. This shift will boost earnings and make this class of stocks more attractive. We may also see a stronger outlook for global stocks that have a tax advantage compared to U.S. companies.
Ahead of the election, an investor's best defense is a strong offense -- this is the time of year when fundamentals matter most. If you're not sure how to evaluate a stock based on its fundamentals, I have an easy-to-use proprietary screening tool, Portfolio Grader, which rates stocks across a number of fundamental criteria. Take a look and see how your portfolio stacks up!
Dan Wiener: Energy, industrial stocks will love a Romney win
Strategy: Unlocking upside from Vanguard mutual funds and exchange-traded funds (ETFs)
His take: No matter who wins on Nov. 6, I don't see interest rates moving higher or lower in the near term, so yields will remain punk. That means high-yielding stocks such as the battleship balance sheet companies owned by funds like Vanguard Dividend Growth (VDIGX) and Vanguard Equity Income (VEIPX) will remain in demand.
A Romney win will most likely mean "drill, drill, drill." I'd expect investors to bid up prices of stocks in the energy sector, so a fund like Vanguard Energy (VGENX) should do well. Ditto companies in heavily regulated industries like chemicals, which may see an easing of restrictions, so sector ETFs like Vanguard Industrials ETF (VIS) and Vanguard Materials ETF (VAW) could benefit.
A second Obama term should be fine for financials, as there's no uncertainty about what's going to happen in the sector -- Dodd-Frank is already on the books and stays in place. So, Vanguard Financials ETF (VFH) could be a good bet.
No matter who wins the White House, just the fact that the unease and uncertainty around the election will be over (unless we have another "hanging chads" moment) should be good for the markets overall. So, while it's fun to speculate over which sectors will rise and which will fall, my preference as always is to stay diversified.
Richard Band: Dividends are still king
Strategy: Low-risk, long-term investing with dividend opportunities
His take: Despite the coming tax changes, dividend stocks still offer income, appreciation, and an admirable level of safety.
The balance of power favors Democrats no matter who wins the election. Democrats will control the Senate and the White House during the lame-duck session, so they can force concessions from the Republicans by threatening to take us over the fiscal cliff well into 2013.
I expect investors will face at least some tax increases in 2013. But I don't believe the dividend tax will go up as much as Wall Street had feared earlier; a ceiling of 20% or 25% seems more probable now.
Thus, I see a buying opportunity shaping up over the next few weeks in high-dividend stocks -- especially those yielding 3% or more. Good values cut across sector and industry lines. Some of my favorites include PG&E Corp. (PCG) in the utility space; McDonald's (MCD) among the restaurants; Intel (INTC) in the tech sector; and Chevron (CVX) among the oils.
More from our experts
Vote Romney today.
What if it is the same administration?
Maybe they could be repairing the damage done to the nation DURING THE FRENCH AND INDIAN/ REVOLUTIONARY/CIVIL/WWI/WWII/KOREA/VIET NAM/GULF WAR 1/IRAQ/AFGANISTAN/LEADING FROM BEHIND IN LIBYA/AND THE WAR ON DRUGS?
Just whom repairs the damage from giving hundreds of billions to companies that WERE LAZILY HANDED THOSE FUNDS BY A GOVERNMENT OF LAWYERS THAT DID NOT HAVE THE FORESIGHT TO HAVE CONTRACTUAL CONDITIONS TO THOSE MONIES THAT ACTUALLY FORCED THE FRUITION OF THE ORIGINAL GOAL INTENDED (U.S. CITIZEN EMPLOYMENT) WHEN TOSSING AROUND THAT MONEY?
Katie, Obamacare lessens the dependency on Medicare and Medicaid, and will save the American tax payers billions in the long run reducing our tax burden significantly.
Obamacare allows children up to 26 to stay on their parents insurance plan, so every time one falls out of a dorm window tax payers wont flip the bill in the emergency room.
Obamacare allows those with pre-existing conditions to purchase insurance and not go bankrupt and get on medicare, burdening the tax payers.
Republicans who have voiced favor for a individual mandate for health insurance in the past,
Mitt Romney, Newt Gingrich, John McCain, Tommy Thompson, Chuck Grassley, Bob Bennet, Orin Hatch, Jim DeMint, and the Heritage Foundation. If you think voting Republican will repeal Obamacare your sadly mistaken, Republicans secretly love it.
and the stock market's reflecting a Romney win, and finally we as a nation can EXHALE!! relax and get back to prosperity and REAL jobs, REAL PAYING, permanent jobs not some temp nonsense
I welcome President Romney
Back in the good old bad days, everyone worked, starved, or had someone else who worked and supported them. Family structures were like that. People had children who they hoped would take care of them when they could no longer work / support themselves.
The working class has to support those who do not work as well as those who choose not to work, or are wealthy. The poor and the wealthy both are supported by those who work for a living generating goods / services. The very rich and the very poor both consume far more goods and services than they provide back to the economy. They are both net consumers and not producers. When you have too many of each of these groups, you'll have less productive economic activity.
The economy works by the transfer of goods and services to each other. When money is taken out of circulation by those of us fortunately enough to be able to save / hoard money, it reduces the amount of money in circulation.
When money is saved / hoarded, it takes money out of the public bucket and reduces the amount left in it for everyone else. The Great Depression was one of those situations where most of the money was out of the bucket (as are recessions). No money, no jobs, no spending.
The government puts money back into the system (bucket) to get money moving again (expansion of the money supply courtesy of the FED). They get it back as the money moves from one person's pocket to another's by the way of taxes. However, money stashed away doesn't generate much activity in the economy. The wealthy shouldn't have been allowed to have that much money that they can't even spend it all in their lifetimes in the first place. The problem isn't that there isn't enough wealth. It's the uneven distribution of it. Money put into the hands of those who spend it creates more economic activity than those who just invests it.
"Psched: You really need to kick the MSNBC habit. The wealthy are a diverse group. Most work extremely hard and many hours per week. Most I know grew up poor or came from another country for the opportunities that were not available in their country. The American Dream, oh that's right, Obama wants to kill that. Job One."
It's like the military. Having a commander is useful to direct activities and resources, but having a lot of them, is overkill and they all need someone who actually does the work.
I don't "work" for a living. I direct others to do the work for me, but I know my contribution is merely providing opportunities for others who do the actual tasks.
The American Dream was once "to own a home," 10 years ago, and now it's to have a steady job as the defining criteria as surveyed recent as what defines middle class. The middle class has been steadily losing buying power since 1999 when adjusted for inflation. We went from a one wage earner family in the 50's & 60's where minimum wage was able to sustain a middle class lifestyle, to having a two wage earner working 3 jobs at minimum wage barely being able to sustain themselves. At the same time there are more and more millionaires and billionaires who do little more than to try to find new ways to amuse themselves.
The middle class is slowly being bled to death until we equal the workforce of third world countries.
"That is a "bucket" of something.
Case and point: We had a tree fall in front of our house. The city sent out workers to remove the tree. They had 1 guy holding the flag on each side of the tree, two guys watching and one guy sawing. Any business person would cringe at that inefficiency or just look at the DMV (or healthcare next year).."
Yes the government is inefficient, but it's not in the business to make money. If it were, it would be communist. Government spending is always wasteful. The military is the case in point as are all the government departments (except the IRS). They all lose money. But at the same time, would you want your military run like the credit rating agencies (that certified junk mortgages as AAA rated investments), or left to the "honesty" of the marketplace (where profit comes before consumers)? The government also funds (loses money) on research which no private company would spend money on like space technology, or nuclear energy. Road, bridges, water projects, conservation restoration (after being pilfered by private enterprise to make a fast buck), healthcare, Social Security, education, etc are just a few things that aren't profitable enough for private enterprise to invest in. Could they do it cheaper? No doubt but that also means more auditors / inspectors and more overhead costs. It's a case of how much do you spend to how much you save equation.
You really need to kick the MSNBC habit. The wealthy are a diverse group. Most work extremely hard and many hours per week. Most I know grew up poor or came from another country for the opportunities that were not available in their country. The American Dream, oh that's right, Obama wants to kill that. Job One.
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