Defensive moves by traders and investors hit a brick wall. Time to re-assess year end stock and bond buy and sell candidates.
WASHINGTON, November 9, 2016 – While Tuesday’s Presidential win by Donald Trump was completely unexpected by pollsters, media blow-dries, obnoxious and often-violent Soros-paid protestors (agitators) and longtime Bill and Hillary Clinton sycophants, it didn’t really surprise The Prudent Man very much.
Hailing from the Buckeye State, that virtually infallible predictor of Presidential victories, Mr. And Mrs. Prudent have felt since sometime last spring that The Donald was not only seeing but speaking to the deepening American Tragedy that coastal elites either ignored or sneered at: The absolute destruction of America’s middle class, which, yes, includes an awful lot of long-term unemployed union dudes who, frankly, wonder what the hell happened over the past eight years and finally decided it was the party they routinely voted for. When these folks get bent out of shape, they make things happen. And they did.
What’s a surprised investor to do? Here are a few ideas from our…
Whenever you get any kind of extreme surprise in the world, whether a violent revolution, the launch of a new war, a massive natural disaster and the like, stock markets around the world tend to react predictably, or at least they used to back in the day before endless central bank manipulations made a mockery out of long-reliable standard investing techniques.
Donald Trump’s election as America’s 45th President violently upset the certain certainties of this country’s globalist Ruling Classes, including their longstanding investment strategies based on Hillary Clinton’s expected Presidential coronation.
This turned out to be a seriously wrong answer. In the short term at least, this requires that small investors such as ourselves take a look at our own portfolios to see if our current holdings are going to be productive in a new economic environment in which most surprises coming out of Washington are likely to be pro-business, pro-building, pro-infrastructure, pro-energy and, in general pro-growth.
Obamacare will either be trashed entirely or rebuilt as something more realistic and affordable. Healthcare will be carefully examined but no longer subject to irrational attack. America’s military decline will be halted or reversed. And the wholesale destruction of middle-class American jobs and/or the importation of visa-holding foreigners tasked with displacing more highly paid American workers will be wound down, particularly in the tech industries.
What this means for investors is that instead of looking at stocks that will work under likely Hillary Clinton policies, we’ll need to look instead at stocks that will get a boost from the wholly different policies that are likely to be pursued by Donald Trump.
We’ll be re-reading the tea leaves over the next few hours and/or days and then will consider a wholesale reorientation of our investment thesis, changing our focus from income and defensive issues to, well, the kind of kind of companies that can help Make America Great Again. Here are some areas we’ll be looking at:
- Pharmaceuticals. We’ve been forced to back out of a couple pharmaceutical investments over the last few months since they’ve routinely suffered continuous and sometimes horrendous declines. Are these companies unprofitable? Far from it. The problem stems (or stemmed) from the perception that the government intended to target these companies as scapegoats, forcing them to drastically and often unfairly alter their pricing structures in such a way that would minimize profitability, particularly under a new Clinton administration. These stocks, or most of them, made the beginnings of an impressive recovery today. As an example, our shares of the close-to-expiration date Allergan convertible preferred stock A (symbol: AGN/PRA), which have been destroyed ruthlessly for over a month, are currently up a whopping $44.51 as of 3 p.m. Wednesday afternoon. It may be time to get back into pharma and biotech after 2016’s investing nightmare in this sector.
- Solar and wind power. Doomed. This whole area has been a massive, taxpayer funded boondoggle from the get-go, benefiting only rich investors who pay megabucks to lobbyists to buy off politicians to support anything that defends against a
global warmingclimate change model that has been a farce for decades and as phony as a $3 bill. This investment sector is dead to us.
- Oil and gas. Drill, baby, drill. Oversupply issues will continue to haunt these stocks for at least a few more months on and off. But once the world gets used to lower energy prices, the world might start making and consuming more stuff once again, putting first a floor and then a turbo-charger on currently moribund energy prices. What’s not to like in that kind of future? Even the nearly-destroyed coal industry might start catching a bid again.
- Tech. Some tech sectors are going to get punished for awhile. That’s at least in part because this industry has been notorious for offshoring nearly every aspect of manufacturing while actually importing cheap green-card labor to displace American techies. Silicon Valley’s mega-wealthy tech-savvy sociopaths have built for themselves wealth beyond avarice by destroying a significant part of the tech labor force here. Donald Trump will be having a few words with these condescending bastards soon, so let’s be careful in this sector for awhile until the smoke clears.
- Mining and materials. If Donald Trump is as good as his word, America will somehow come up with the $$$ to start bringing our horrendously decaying infrastructure into something that resembles the 21st century. As a result, metals, materials, energy, lumber—you name it—any company that supplies the raw materials for building and/or repairing stuff, will catch a bid, including some companies that supply product to this sector. As a great example, the long-dead stock of American giant Caterpillar (CAT) is up a massive $6.95 per share at the moment, up over 8 percent on the day. There will be more stocks like this, but we’ll have to avoid the temptation of chasing them.
- Financials. Still dicey, but likely able to recover, particularly if a Trump Administration and an all-Republican Congress is able to dump at least the more obnoxious aspects of Dodd-Frank.
- Healthcare. A cipher. But, with the likely alteration of Obamacare beyond recognition, the healthcare industry might once again be able to rationalize the availability and cost of healthcare, restoring it to profitability while easing the intolerable burden on the middle class of paying outlandish premiums for coverage that’s proving to be vastly worse (with much higher deductibles) than the previous coverage they liked, not to mention those doctors they wanted to “keep” but actually couldn’t. The rectification of the Obamacare lie could give an immeasurable boost to stocks in this sector.
- Defense and Aerospace. Say no more. This sector could find itself on the Highway to Heaven in a Trump Administration. Barack Obama and his weird socialist-globalist minions have eviscerated not only America’s once-proud armed forces. They’ve also left those soldiers, sailors and airmen with the crappiest, most obsolete arsenal we’ve seen since the 1930s. This will require a massive rebuilding and resupplying effort, and stocks in this sector will benefit mightily.
- “Green” industries. Stick a fork in them. They’re done. That includes “genius” Elon Musk, whose only genius is for making phony “profits” pushing products no one wants (costly electric cars and costly solar installations) that are wholly subsidized by the American taxpayer. Why in Hades are Americans subsidizing the purchase of Teslas by rich people (who are the only folks who can afford them) so they can have a fancy car with a price that’s subsidized for them by the average American working stiff. Uh-huh. Buh-bye.
These are a few sectors we’re going to be looking into over the next few days and weeks. Portfolios built largely on the suppositions we had to make over the past eight miserable years are going to need a bit of infrastructure help themselves. We’ll try to figure out how to approach what’s actually an exciting dilemma and we’ll let you know what we think right here.
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