Tweet

How to Invest in the New Economy

Written by: Sean Hyman

Article Overview: We already know that Obama likes to moon-light as a stock market guru, but can we be sure that his policies and rhetoric will be good for private business? Well that all depends. Look no further than the proposed budget and the stimulus program. The devil is in the details, as they say. 

How to Invest in the New Economy

When Hope and Change Replace Earnings Reports?

In case you haven't heard by now, Obama's first 100 days have come and gone and despite what you may have been led to believe, you are still here.You've persevered through the bank stress tests, you've outlasted the dreaded swine-flu, and you've overcome all of the failed policies of every President ever to not be named Barack Obama.Now what?

As I look at my measly 401K balance, I'm trying to get a handle on where my investment dollars should be allocated going forward (for a less tongue-in-cheek answer click here). A natural tendency would be to just do the opposite of what I did last year in some Costanza-like paradigm shift for my investing strategy. But this time it's different.Gone are the days of free-market capitalism; say hello to direct government participation!

We already know that Obama likes to moon-light as a stock market guru, but can we be sure that his policies and rhetoric will be good for private business?Well that all depends.Look no further than the proposed budget and the stimulus program.The devil is in the details, as they say.

There's plenty of talk about which sectors of the economy might do well and which might not.Let's take a look at a few of them:

First the GOOD (companies that should benefit the most):

Alternative energy.A mainstay of Obama's platform, green energy companies stand to receive a large portion of the stimulus package.In fact, some folks claim that clean energy stocks will be to this decade what internet stocks were to the late 1990s.Don't believe me?Check out First Solar (FSLR).

Basic materials.These stocks will benefit from all of the new construction initiatives that have been put forth.Caterpillar (CAT) and US Steel (X) could do well.

Now the BAD (companies that may benefit although too early to tell):

Healthcare. There's been a lot of talk recently about the universal healthcare program and whether or not it will be good for healthcare stocks, particularly the insurers.These companies have already agreed to price-cuts which could affect profitability.Not to mention that the details of how the plan is going to work have not been released yet.Aetna (AET) and United Healthcare (UNH) could be in play.

Financials.A necessary evil.Obama has not hid his disdain for this group, and they have received a lot of TARP money.Whether or not they can return to profitability remains to be seen.Keep an eye on Citigroup (C), Wells Fargo (WFC), and Bank of America (BAC).

And the UGLY (companies that must defy the odds to do well):

Big Oil.The only group hated as much as the financial sector. The antithesis to green energy stocks.They have already had tax considerations reduced, are getting no stimulus money, and have been publically castigated.Look out Exxon (XOM) and Chevron (CVX).

Defense.The biggest cuts in the Obama Budget have been in defense and military spending.This could make it a challenging environment for defense contractors General Dynamics (GD) and Raytheon (RTN).

These are just a few of the domestic themes which have yet to be played out here in the US.But does this mean that the "good" sectors should be bought, and the "ugly" should be sold?

Not necessarily.There are many different factors that go into choosing an investment besides what the President of the United States likes best. The overall investing climate is affected by factors such as inflation, taxes, interest rates, employment and so forth. That is why it is so important, especially in today's investing environment, to learn about the different relationships and factors that affect your investments.

Related Articles
  A Million Dollar Investment
  MLM rags to riches in a downward economy
  How to Create Multiple Streams of Income - Online
  Home Based Business--Start Up Money From Angels
  How Much Money can You Invest and When to Sell Your Stocks

Article Tags: barack obama, basic materials, costanza, devil is in the details, energy companies, energy stocks, free market capitalism, fslr, government participation, green energy, internet stocks, investment dollars, market guru, natural tendency, paradigm shift, sectors of the economy, stimulus package, stress tests, swine flu, tongue in cheek



Related Forum Posts
Go for both! - That's life Julie as a business owner. You never have enough resources. Invest the money in your patent if you really have something worth protecting and bootstrap your marketing efforts so that you get some clients and continue to grow.
$500,000 Give-away - I like dreaming so here goes... note: I didn't have much time to dream this up... 1. pay off my mom's mortgage 2. Take family (mom and brothers) on Vacation - probably send each one off to their own destinaton - no need to mix pleasure and family members. 3. buy some beach front property in the US 4. Invest in a business 5. Buy myself some nice suits and shirts.
Hiring good people - Thanks everyone. From the PROFIT companies the success formula seems to be: - Give employees responsibilities that make them stretch themselves - Provide them with a good work environment and happy co-workers - Invest in them by giving them training - Build projects with them to give them some ownership of the idea - Make sure they fit your company culture And almost all of them say: Hire slow, fire fast.
What is your retirement plan? - When we work for others, we've got all kinds of choices. Invest in their pension plan, a 401K, an IRA, savings, etc. I'm curious as to what entrepreneurs do. Obviously since we work for ourselves we never have to retire unless we want to... but what if we want to? What's [i:1wi1t1fi]your [/i:1wi1t1fi]plan to ensure that you can retire comfortably? Also, how many of us have health insurance?
Re: Ridiculous Ideas That Made Millions - Dear GT Bulmer, Great post and a super article. Good advice on investing especially "Stick to your strengths" Invest in a business you understand. For example a lumber jack would see a good tree cutting tool. He wouldn't understand the next fashion trend in women's high heel shoes. For our inventors invent in a business you understand. If you see a need. You may see an invention.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

The Value of Small Businesses

Gas bills go up by 18% can we take any more

RULE YOUR BUSINESS LIKE A SHINE STAR

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.