A few weeks ago, when this country was in full panic mode and hedge funds were having to dump huge amounts of good companies to cover redemptions, I bought the stocks of four companies–General Electric, Chevron, Apple and Johnson and Johnson. I considered it an Obama Put. With the exception of Apple the stocks were paying dividends that were higher than Treasury rates, had really strong balance sheets and were in businesses I thought would flourish in an Obama Administration. Today alone, GE was up almost 8%, Chevron-6%, Apple 4% , and JNJ 1%. I’m not saying this will continue, but my reasoning was as follows.
GE-The next four years is about building infrastructure, especially green infrastructure. GE is a world leader in all elements. In four years, GE Capital will be down to 1/3 of their business, not 1/2.
CVX-I think Cheney’s ten day trip to Saudi Arabia and the rest of the Gulf countries in March was meant to insure that oil prices came down substantially before the election–the same tactic that had worked well for Republicans in 2004. Although OPEC kept pumping at full capacity, even as it was obvious we were heading into a worldwide recession, they have now announced serious production cuts for this next month. Of course oil rose $6 a barrel today.
AAPL-In an austere Christmas, an IPod or IPhone is still a valued gift. My wife in I have been in Apple stores in three cities since the crash, and the energy and crowd is like an Obama Phonebank. It’s clear that Universal Broadband will be an important objective of an Obama administration. That will only make it easier and faster to get that 8 GB high def Movie file into your I-Tunes.
JNJ-I just think Johnson and Johnson is a world class company and it’s obvious that health care will be one of the issues as all the Boomers get cranky and old.
Far be it from me to call a market bottom, but I have a good feeling about our ability to navigate the choppy waters ahead. My favorite measure of credit flows, LIBOR is at 2.86%. That is down from 4.82% on October 10. That means that interbank lending is trending towards normality.
Barack will have a huge amount of work ahead of him, but we all need him to succeed.