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Mad Hedge Fund Trader

Mad Hedge Fund Trader

John Thomas, The Mad Hedge Fund Trader is one of today's most successful Hedge Fund Managers and a 40 year veteran of the financial markets.…

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What to Invest in Should the Republicans Win in November

What will the Republicans winning in November mean for your portfolio?  This is an easy call to make. Expect a dramatic roll back of the leftward policies the country has adopted over the last two years, and a sudden revival of the industries that have suffered as a result. In fact, if you look at the charts below, many of the stocks I am suggesting have already started to discount a conservative win.

Big oil companies will be huge winners. American oil imports from the Middle East will accelerate, where the industry earns 80% of its profits. That will bring peak oil sooner, easily taking crude over $100/barrel quickly, and eventually to $150 or $200. Restrictions on both onshore and offshore drilling will get rolled back to their Bush era laissez faire levels, cutting costs and boosting profitability. You want to own Chevron (CVX), ExxonMobile (XOM), Conoco Phillips (COP), and of course, BP (BP). The drilling and service companies, like Transocean (RIG) and Diamond Offshore (DO), should do spectacularly well.

Coal will benefit immensely from relaxed environmental regulation, paving the way for more exports to China. You want to own Peabody Energy (BTU) and Joy Global (JOYG). Nuclear Energy is a big beneficiary here, which should drive you into Shaw Group (SHAW) and top uranium producer Cameco (CCJ). Forget about natural gas companies, like Chesapeake Energy (CHK) and Devon Energy (DVN). Relaxed environmental controls will stonewall restrictions on the new fracking technology that is unleashing huge supplies on the market, driving prices for CH4 to the basement.

You can count on subsidies for alternative energy to get axed as unaffordable luxuries, which have created 500,000 jobs in California alone in the past two years. After all, global warming is nothing more than a leftist hoax, right? The good news is that the higher oil prices Republican policies are guaranteed to bring means that green companies of every stripe will become profitable in their own right, making subsidies unnecessary. Remember, Bush policies took crude from $20/barrel to $150, topping up the Strategic Petroleum Reserve at the absolute top. Buy First Solar (FSLR) on the knee jerk sell off after the election.

The Republican portfolio should also have a heavy weighting in defense companies, as an expanded war against terrorism means we will be fighting more wars in more places for longer. Any shopping list should include Northrop Grumman (NOC) and General Dynamics (GD). Also prospering mightily will be the makers of prosthetic limbs for the military, like Zimmer Holdings (ZMH).

Health care is a natural. It is unlikely that we could see a complete abolition of Obama care until 2016 at the earliest. But a Republican win in the House would eliminate the possibility of any expansion of socialized medicine. Health care companies like United Health (UNH), Humana (HUM), and Pfizer (PFE) will do well.

The government's war on for profit education will grind to a complete halt. A tidal wave of government subsidized loans to the industry assured, and hapless students stuck with the bill, companies like DeVry (DV), Strayer Education (STRA), and Corinthian Colleges (COCO) will rocket.

Major tax cuts for the top 2% of income earners costing $700 billion over ten years and more loopholes for corporations pared with increased defense spending promise to send deficits through the roof. That will last bring an end to the 30 year bull market in Treasury bonds, which are teetering as I write this. The double short Treasury ETF (TBT) and the triple short (TMV) will have to be a core holding in any long term portfolio.

As the two parties are diametrically and violently opposed to each other on virtually every issue, the impact of a regime change on the economy and the markets promises to be huge. I could write on this for days, so these are just the high points.

By. Mad Hedge Fund Trader




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Leave a comment
  • Anonymous on September 10 2010 said:
    I question your facts, because I can't tell if this article is sarcastic or not. I will just point out one mistake: 500,000 green jobs created in CA in the last two years? Hardly. According to Employment Development Department- Labor Market Information Division, California's Green Economy, April, 2010, there are a TOTAL of 500,000 green jobs in CA. Period. You can't possibly argue that ALL OF THEM have been created in the last two years. I also note that you are just recanting the left's talking point about 'tax cuts for the rich' increasing the deficit. You really should read something other than Krugman and Friedman in the NY Times.
  • Anonymous on September 10 2010 said:
    The reality is that almost nothing will happen. The Administration will continue its' policies via Executive Regulations and Obama will veto any significant changes in the law. This will be complete Girdlock. Republicans will spend lot's of time trying to reverse Health Care, Veto, everything stays the same.
  • Anonymous on September 10 2010 said:
    @Rick, I don't agree with this article completely either, but I have to call B.S. on your last statement. The idea that tax cuts will not increase the deficit in the long-run, but will, rather, pay for themselves in the long run through increased economic activity, is straight out of Friedman. CONTRARY to Friedman, tax cuts for any class, if not accompanied by spending cuts, WILL result in deficits. Demo[n]crats like to spend, but they are not above raising taxes. The Con[servative]s think they can increase spending while cutting taxes, and thus maintain a facade of fiscal responsibility. So they have no other choice but to play a kick the can game of debt and inflation. It is very unlikely that spending will be decreased, regardless of the party in charge; it will probably be increased. So maybe you SHOULD read Friedman since you unknowingly support and spread his ideas.
  • Anonymous on September 10 2010 said:
    Brad -That's nonsense. No conservative I know is interested in increasing spending ... some republicans maybe. Secondly, whether a tax cut "pays for itself" is a function of the current position on the Laffer curve and the magnitude of the cut. It is a simple but discouraging political question if politicians can be re/elected while not promising/ delivering more access to the trough.
  • Anonymous on September 12 2010 said:
    So which one of Obama's advisors wrote this "piece?" It's a pretty good hit piece on the right and Republicans, but it needs just a tad more radical left talking points to be perfect and get published on the Huffington Post. >:-( I thought I was going to get some valuable information from this post, not a diatribe against conservatives and Republicans. :-(
  • Anonymous on September 14 2010 said:
    "As the two parties are diametrically and violently opposed to each other on virtually every issue, the impact of a regime change on the economy and the markets promises to be huge."Anyone who thinks there's a difference between the dems and repubs is a fool. They're both lap dog to the same corporate interests.

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