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Politics/Investing

post #1 of 4
Thread Starter 
Because it is Super Tuesday I have been reading up on more of the canidates policies and it gave me the idea to create a thread to discuss stocks/sectors that will be influenced by our new president come Novemeber.

One thing that caught my eye when I was reading this from Barack Obama's website:

"Simplify Tax Filings for Middle Class Americans: Obama will dramatically simplify tax filings so that millions of Americans will be able to do their taxes in less than five minutes. Obama will ensure that the IRS uses the information it already gets from banks and employers to give taxpayers the option of pre-filled tax forms to verify, sign and return. Experts estimate that the Obama proposal will save Americans up to 200 million total hours of work and aggravation and up to $2 billion in tax preparer fees. "

Immediately I'm thinking short H&R Block? Another example, this time from Hillary, is how the healthcare sector will be influenced if she were to socialize healthcare.

I started investing in 2004 when Bush was going for his second term and was too young to even be thinking about things like this. My biggest question is how soon do investors price this into the companies stock?

In my opinion it seems like there could be some easy money to be made for anyone keeping track of the canidates policies and how it will effect the markets.
post #2 of 4
Over 80% of what candidates promise, never come about.
post #3 of 4
It's an interesting idea - I'm sure it will have an impact, though I'm not sure how dramatic it will be.

However, I expect that you're not alone in considering this, and that certain stocks will rise or fall gradually before the election in anticipation of the consequences, decreasing the gain/loss of specific securities. The more predictable the outcome, the less dramatic your profits will be when things turn out as expected.

There might be a more profitable opportunity to cash in on false expectations - given that the prices of certain stocks will be affected by expectations, the prices (that gradually adjusted over the preceding months) will snap back to "normal" if those expectations don't pan out.

Given your example, the price of H&R Block will decline gradually as Obama's chances are perceived to increase, such that if he is elected, most of the loss will already be reflected ... but if another candidate wins, especially if it's a surprise victory, the price of the stock will rebound after the fact. I expect that will be faster and more dramatic, so hedging your investment would be wise (maybe even setting up a straddle to cover both possibilities).

I'll concede Lucky's point about campaign promises - there's a huge difference between what a politician says on the campaign trail and what they do in office. Aside of the dishonest nature of the political game, the President has to work through congress to get legislation passed, and that's generally where even the most sincere of intentions gets smothered.

It might also be an idea to look at who owns each candidate - the companies that put money into the candidates' pockets, to whom they will be beholden once they are elected. Regardless of their public claims, politicians will serve their masters (especially during their first term, when they know they'll need their support again), and the companies that buy Presidents also buy senators and congressmen so that they can influence the entire process.
post #4 of 4
One thing for certain. If Dems get the Presidency and maintain control of the Congress, look for higher taxes for businesses and 'upper income' individuals (>$80K). Also look for windfall profit taxes on oil companies and the elimination of the tax advantages for domestic drillers. Also look for a substantial increase the capitol gains tax. Oil company and domestic drillers will be hurt the most. I am no expert on health care, but if they pull off some nationalized health care program, I would guess that would not be good for insurance companies.

On the plus side, look for the Democrats to provide nice tax breaks and carbon credit programs that will pump up solar stocks and other alternative energy stocks.

At least my two cents.
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