JOHN DVORAK'S SECOND OPINION
How to Obama-proof your portfolio
Commentary: One approach, apparently, is not to invest in America
By John C. Dvorak
Last update: 3:00 p.m. EDT Oct. 31, 2008Comments: 394BERKELEY, Calif. (MarketWatch) -- With the election of Barack Obama almost assured, investors now have to figure out what it means for their individual portfolios.
Will the technology sector benefit or suffer with Obama? That's my main concern. It's hard to tell, since Obama has not been specific about the concerns of the tech sector.
We do know that Obama will have to push the alternative-energy agenda and the greenhouse-gas/carbon-footprint agenda. He also promised a reduction in dependence on foreign oil.
This may mean good news for the semiconductor business, where smarter electronics translate into more energy efficiency. I perpetually like Intel Corp. (INTC:Intel Corporation
INTC 15.31, -0.81, -5.0%) as an investment in this regard, but the entire semiconductor sector could do well.
All this, of course, is dependent on the economy not going totally into the tank like it's 1929. But how does an investor protect himself or herself when we really don't know what's going to happen?
While I normally do not like using anonymous sources, I have to in this instance for personal and political reasons. This advice comes from a "Forbes 100 richest" investor friend who is risk-averse and has been thinking about Obama-proofing his portfolio.
"The main theme is not to invest in America," he says. "That means non-USA oil and gas companies. The antidrilling prejudice and windfall-profits enthusiasm will drive the United States to actually import more oil, and while investors flee U.S. names, winners are Brazilian oil giant Petroleo Brasileiro (PBR:petroleo brasileiro sa petro sponsored adr
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PBR 28.00, -2.58, -8.4%) , French oil Total (TOT:total s a sponsored adr
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TOT 55.15, -2.85, -4.9%) , Spanish oil YPF (YPF:YPF Sociedad Anonima
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YPF 47.32, -1.50, -3.1%) and Chinese oil China Petroleum & Chemical (SNP:china pete & chem corp spon adr h shs
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SNP 63.22, -1.98, -3.0%) .
"Also watch out for bubble in U.S. solar and wind start-ups, since government subsidies will accelerate and swindles of all kinds will thus multiply.
"Avoid financials like Charles Schwab (SCHW:Charles Schwab & Co., Inc
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Last: 20.25-0.67-3.20%
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SCHW 20.25, -0.67, -3.2%) , since Obama believes in rewarding 'work not wealth,' so people who work at investment houses and their private clients will be taxed more to demotivate investment. The government should invest and individuals should not invest. That is a constant theme from the Obama camp.
"Non-U.S. health care: New, free medical-care program will kill drug prices and kill discovery budgets as science shifts from disease (no money) back to recreation. (You will pay for Viagra.) Thus non-U.S. drug companies will benefit from the United States getting rid of the drug-discovery business.
"One U.S. bright spot: housing rebound. Combination of no-growth politics and mortgage forgiveness will reduce supply and increase demand, ending the housing problem. Also non-U.S. wealth will buy up prime real estate in big cities. But those long commutes from Stockton to San Francisco? That's dead. Get used to eating root vegetables in winter, since only Japanese tourists can afford Latin American peaches in winter."
I wasn't sure what the investment in root vegetables would be. ConAgra Foods Inc. (CAG:ConAgra Inc
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CAG 17.64, -0.28, -1.6%) ?
Clearly this is one man's opinion about the future; he could be wrong. He's just not in a position to take any chances, and there are probably a few others like him. None of it bodes well.
My opinion? From a historical perspective, things should actually look good for at least a year. Then we will revisit the topic. I still like Intel.
Disclaimer: I hold a short position in oil futures. My SEP-IRA has a position in DTO, a commodity-based exchange traded note issued by Deutsche Bank that is short oil futures. I have no other investment in any company or sector mentioned above. |
