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The Republican Portfolio

Submitted by madhedgefundtrader on 09/15/2010 00:00 -0400

Let’s say the Republicans take everything in November, what will it 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. So what if someone dumps a million barrels of oil on your beach. Suck it up and move inland. The stuff goes away by itself any way. 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 peak. 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. Pakistan is a sure thing, if we aren’t there already, and Iran is just a matter of time. Any shopping list should include Northrop Grumman (NOC), Raytheon (RTN), Boing (BA), United Technology (UTX), Lockheed Martin (LMT), 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 (click here for my last piece at http://www.madhedgefundtrader.com/august-18-2010.html ). With 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 3% of income earners costing $700 billion over ten years and more loopholes for corporations pared with increased defense spending promise to send federal 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) 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.

To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.

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Thu, 09/16/2010 - 04:51 | 584801 Strongbad

Wow calm down everyone. Just because it isn't straight-up doom and gloom doesn't make it a bad article. Obviously coal and oil will do better with GOP in Congress since the fear of "cap and trade" is currently priced in.

Thu, 09/16/2010 - 02:06 | 584749 Hook Line and S...

Just wondering how our beloved gov plantation collection agency is going to manage to process 1099's for every durable good sold under $600? 1099 for a radar range, a muffler, or a set of cheap tires. More compelling yet, if real inflation in the next few years is anything like the last 10, then expect to be filling out 1099's for the sale of toasters, pillows, and household detergent purchased in bulk before you wake from snoring tomorrow. Here, cash becomes an incredible barrier to 'efficiency'. Once those nasty health hazardous green debt coupons are gone we will have the ubiquitous VAT hungry well hung big brother taking notice of every condom, gum stick, and roll of TP we purchase.

Wed, 09/15/2010 - 23:47 | 584630 CBTeas

So let me get this straight...the healthcare bill was a 2300 page lobbyist-written legislation that institutionalized all that was wrong with our for-profit health care reimbursement system. And you think the healthcare firms will do even better with the Republicans minding the store.

I think it can't get much better for these crooks in the healthcare reimbursement business. How obscene do the profits need to be for a bunch of insurance companies that have zero value add to the process? Good luck with your health care thesis.

Thu, 09/16/2010 - 01:46 | 584740 StychoKiller

Unfortunately for you and I sir/madam, leaving the Decepticrats in charge is like giving a 13-year old your American Express card and ignoring what they're doing with it. Here's whats gonna happen:

The Republicons get a slim majority in the House and whittle the Senate down close to parity. ALL legislation proposed by Obamatron gets stuffed into a toilet somewhere and Obamatron returns the favor by vetoing anything for the next two years, good or bad, it won't matter, it will be vetoed. So much for having adults in GOVT. The system spins merrily along until bad earnings numbers start showing up in the large corporations that cater to the US market(s) [no one can spend due to the ever-increasing unemployment numbers]. At that point, the Republicons will cave in and try to co-opt the game plan of the Decepticrats, namely, trying to "Stimulate" the Economy with MORE Govt spending! So, what was the point of electing the Republicons again? The market(s) continue exploring subterranean landscapes until the rest of the World goes up in flames as well. None of this will end well. If, by some miracle, the Decepticrats hold onto the House, THEY will continue to try to "stimulate" the Economy with MORE Govt spending, and again, we end up burnt to a cinder. Take your "Progressive" social justice outrage somewhere else, elementary school ideas of what's fair and just cannot face the real world of the jungle and survive -- congratulations, your poorly thought out ideas of Socialism have/will kill millions, if not billions -- thanks for playing, game over!

Wed, 09/15/2010 - 23:18 | 584587 Wags

You had me going there until I read

"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."

Living in California we all know that is a big lie.

Thu, 09/16/2010 - 08:32 | 584618 G-R-U-N-T

Good point indeed Wags!! If AB32 isn't repealed it will destroy over a million jobs in California and billions in lost revenue.

Here's the "Cost of State Regulations on California Small Business Study" done at California State University Sacramento September 2009...

http://content.clearchannel.com/cc-common/mlib/616/11/616_1257469416.pdf

Here's another link that gives regular updates on the fraud coming out of the California Air Resource Board.

http://www.killcarb.org/tranpage.html

C.A.R.B a fanatically out of control regulatory board that is literally destroying the capacity for a man to make a living in the State of California. This is the genius of going green in the California State Government. This is what Schwarzenegger and the 2 Headed Hydra Assembly are doing to us. It's absolute insanity.

Wed, 09/15/2010 - 23:28 | 584600 the grateful un...

500k unafforadable luxuries? i took mom (90) to the super sunday, and on the way out i saw a long line at the drive in window to the bank, and i said, is the bank open on sunday?, and she said, (dopey) that's not a bank anymore, its a starbucks. well half a million unaffordable luxuries does not create even a dozen decent paying jobs. live from CA

Wed, 09/15/2010 - 22:13 | 584490 RottingDollar

MHFT posts are getting increasingly tiresome.

Wed, 09/15/2010 - 23:06 | 584572 G-R-U-N-T

Then take your whinning complaining ass to another blog!!!

Wed, 09/15/2010 - 21:55 | 584455 Rahm

Can you say...

Veto Bitchezzz!

Wed, 09/15/2010 - 18:55 | 584237 baldski

What a bunch of rightwingnut whiners and racists on this post! Are you all in the top 1% that might get your taxes increased by 3%? What, you can't afford it?

Please tell me what the Rethuglican party has done for the average working man or woman in this country in the last 30 years? Name me one thing? You and your Rethugs don't give twoshits for the middle class. I hope the pitchforks won't sting too hard when they come for you!

Wed, 09/15/2010 - 23:20 | 584590 the grateful un...

difficulty being most dems don't realize that Clinton is a Republican (rachael maddow said so and i believe it, i know Ms Clinton is a Republican, or how do they say they in polite society, with their pinky finger turned up, a centrist) and they don't know that Obama is Bush dark, same policies, look forward ducklings. their problem bald is they just don't know. but i think you meant to say THEIR pitchforks. i didn't flag you but if i did i would say so. just to set the record straight, Democrats are impeachable, but Republicans are indictable. a clever distinction.

Wed, 09/15/2010 - 22:21 | 584367 G-R-U-N-T

The problem is both parties have looked into the eyes of Medusa. They have become petrified in their position (bent over while special interests thrust their money logs up their ass). Their policies are destroying the very fabric in which our forefathers fought so hard to prevent , evil ,self absorbed, head up their ass, parasitical big government. You see government thinks they are smarter than us regular folk, and because of this they have to be punnished. The Tea Party appears to be the whipping boy in which the average folk want to work through and it seems to be working at least in the short term. Quite literally we need to vote the bumbs out!!!

Wed, 09/15/2010 - 23:39 | 584621 CBTeas

G-R-U-N-T: Don't be fooled by the "throw the bums out" rhetoric. As soon as the "virgins" appear in Washington, they learn that it is much easier to raise re-election money via lobbyists, PACs and corporations so they too become the lap dogs for corporate special interests.

Why else do you think that Bernie Sanders, Dennis Kucinich and Ron Paul are all treated like freak shows? Because they are a rare breed of office holders who did not change their views when they came to Washington. Isn't it interesting that these politicians get no respect from the corporate media?

It is rare that a politician that sticks to their principles can survive in Washington. So don't count on the next Freshman Class to be any different.

Thu, 09/16/2010 - 08:36 | 584890 G-R-U-N-T

You are probably right, however their constituencies must hold them accountable.

What else can we do short of a revolution?

Wed, 09/15/2010 - 16:28 | 583993 Mad Mad Woman

Love it!

Wed, 09/15/2010 - 15:46 | 583841 minus dog

"Expect a dramatic roll back of the leftward policies the country has adopted over the last two years"

Sure, just like all the other dramatic roll-backs they've delivered in the past. Hah.

The GOP, as in institution in its current form, is useless. Too much money and power for too long.

I don't know if the system can be saved at all, but if it can, it sure as hell won't be done by the GOP as we know it.

Wed, 09/15/2010 - 23:36 | 584613 the grateful un...

sentence three contradicts sentence one, the GOP is useless, ergo expect a rollOUT of Leftward policies

Wed, 09/15/2010 - 15:34 | 583799 Ned Zeppelin

MHFT gibberish as usual. Looks like he missed the coverage of the Rethuglicans imploding as the "surprising" victories of Tea Party candidates "unexpectedly" trounced party hacks in some primaries. (MSM quickly adopted the propaganda code we normally see for annoucements of "less than expected" financial data points). Not that the Demoncrats are any better - for sure they are not - but I've been saying those who think the Rethuglicans with their "Idea Deficit" will sweep in November are sadly mistaken - they are cracking up from the inside.

Thu, 09/16/2010 - 22:09 | 586988 Ned Zeppelin

Thanks, House love the show, but I guess a Tea Partier didn't like my opinion. It must have been its unfactual nature.

Wed, 09/15/2010 - 23:31 | 584604 the grateful un...

dammit unflag this man!

Thu, 09/16/2010 - 01:27 | 584733 StychoKiller

Truly, why the junk? Sometimes the truth can be so blindingly obvious!

Just what does anyone "think" the Republicons are gonna do with House & Senate control? Obamatron sure ain't gonna let them even repeal the Health reform bill, let alone cut taxes or spending. We are so screwed until TSHTF!

Wed, 09/15/2010 - 15:27 | 583780 giddy

Radical conservatism bitchez!

Wed, 09/15/2010 - 15:10 | 583740 Bankster T Cubed

Who knew that stock market investing through global systemic COLLAPSE could be so ...so....so....so totally motherfucking copasetic? Let's see, total global systemic collapse, eh? oh, well in that case I think I'll do 65/35 stocks/bonds instead of the 70/30 I had been thinking....and instead of being in AMZN and PCLN, I want MCD, KO, and SO. Yeah, that's right. And for bonds I'll just go Pimco all in. Yeah...this way I think I'll do really well through the GLOBAL SYSTEMIC COLLAPSE that is completely absolutely mathematically certain to happen and happen SOON.

uh..."The double short Treasury ETF (TBT) will have to be a core holding in any long term portfolio"....dude, have you looked at long term charts for these 2x etfs? they all trend towards zero ultimately. bull,bear, whatever. that's the way the math works....mr madman

Thu, 09/16/2010 - 01:24 | 584731 StychoKiller

"Cruxificion? Good, second door on the left, one cross each." :DD

Wed, 09/15/2010 - 20:12 | 584298 cxl9

dude, have you looked at long term charts for these 2x etfs? they all trend towards zero ultimately. bull,bear, whatever. that's the way the math works....mr madman

Then short 'em!

Wed, 09/15/2010 - 14:30 | 583621 AC_Doctor

Is this an April Fool's Day post that is just 7.5 months early?

500,000 green energy jobs created in Kalifornia...really???

Wed, 09/15/2010 - 20:31 | 584323 nmewn

He's counting all the illegals in the green fields too.

Sorry, I really can't help myself sometimes ;-)

Thu, 09/16/2010 - 01:21 | 584729 StychoKiller

Damn, this site is better than Comedy Central could ever hope to be! :DD

Wed, 09/15/2010 - 14:18 | 583593 matthew1182

IOW an "attack" on the United States is imminent.....

Wed, 09/15/2010 - 13:28 | 583506 anony

"...Let’s say the Republicans take everything in November."

Let's say that they won't (I'll be more than dee-lighted to take any side bets offered, that the all this republican b.s. is just a flea fart in a windstorm.

The so-called republicans can't win it all or even most, without us independents who switched from republican registration two years after The Idiot was selected. We well remember what the republicans promised in 1994 and how they violated every single campaign promise in spirit and fact.

So do we do an inverse of your suggestions to profit from a democratic party, (the only other worse choice) status quo?

Thu, 09/16/2010 - 06:27 | 584827 ColonelCooper

Then quit voting "REPUBLICAN" and vote for the right candidate. I claim no allegiance to the R's, in fact, I feel much the same way you do. But we can either make the Republican party into something it wasn't, or build a third.

Either way, the status quo is unacceptable, but lets not cut off our nose to spite our face.

Wed, 09/15/2010 - 13:23 | 583500 jc125d

You can't think there is really any fucking difference between the parties. This here is the 3rd term of Bush II. Get your head out of wherever it is, dude.

Wed, 09/15/2010 - 12:47 | 583440 AchtungAffen

This post looks as if he's investing for apocallypse. The economics of extinction.

Wed, 09/15/2010 - 12:43 | 583432 onlooker

I remember when oil prices spiked under Carter. That was because he was a Republican. Big oil will have a field day if the Republicans get in. And, the cover up of any huge disaster in off shore drilling will be covered up. Witness the Gulf Oil cover up by the closet Republican, Obama. If the Republicans get in, we will still be in Iraq, Afghanistan, and Gitmo will still be operational. We will loose the transparent government we now have with a bunch of back room/secret stuff going on maybe in medical and financial.

And if Republicans get in our education system will be upside down. The Democrats Obama and his Minister of Education are telling the American public that they need education. with the not so subtle implication that if you are part of the 17% out of work, it is your own fault for not having enough education. Not our fault says Obama and the Democrats, it is the American Citizens fault for not getting educated. The Republicans will tell the Citizens that they are jobless because they got too much education. Yep, you can bank on it. You can bank on it--- almost sounds profane does it not?

Wed, 09/15/2010 - 12:31 | 583403 zerosum

You're mad alright. You must be thinking that the GOP of, say, 1950 will be taking over.You really are an idiot.

Wed, 09/15/2010 - 12:30 | 583400 gmrpeabody

ROFLMAO!!!!

Wed, 09/15/2010 - 12:13 | 583368 Maos Dog

Actually, here is what I have been thinking, I will express it in as simple terms as possible:

1) Fed has been printing money

2) Banks expanding balance sheets

3) However, money just "sits around", no one wants to borrow, banks don't want to lend

4) Repubs win - Increase optimism about economy - pent up demand released?

- Causing -

5) Massive increase in money supply velocity? Causing crushing inflation?

Any I wrong here is this overly simplistic?

Wed, 09/15/2010 - 12:12 | 583367 Sarah Conner

The solutions to our problems are not politically feasable for either party. Only after a total meltdown will the foundation for a sustainable society be built.

Wed, 09/15/2010 - 15:57 | 583872 Troy Ounce

Thu, 09/16/2010 - 06:22 | 584825 ColonelCooper

You could have saved yourself a little time and just put +5.

Wed, 09/15/2010 - 15:57 | 583871 Troy Ounce

Wed, 09/15/2010 - 15:58 | 583870 Troy Ounce

Wed, 09/15/2010 - 15:58 | 583869 Troy Ounce

Wed, 09/15/2010 - 15:52 | 583854 Troy Ounce

Wed, 09/15/2010 - 12:03 | 583353 thepigman

Yup..yup..the Republicans will save
us. Sure thing.
Put all your money
on it...Methinks MHFT has been at this too long. The
old angles don't work
in a depression.
Maybe Delaware can
elect that Tea Party nutjob even wacko Karl Rove thinks is
nuts. Then we'll be
all set...maybe Ben
can press some more
buttons....buy....
buy....buy

Wed, 09/15/2010 - 11:51 | 583324 publius999

Chesapeake Energy (CHK) and Devon Energy (DVN) are both big shale gas explorer-producers. Thus, a relaxation of regulations will help, not hinder, them.

Wed, 09/15/2010 - 11:45 | 583312 the grateful un...

News flash, the Republican take over of the house, stalled when would be speaker Boehner had to back down to Obama on tax cuts. Dems hold all the aces, they find some rich people to say they are fine with paying more taxes. They offer up Defense cuts, the Sec of Def has already approved those. (he is a Republican). Defense is probably the numer one demand component of oil prices. Cut back on the stupid wars, cut back on energy demand. $50 oil and Dubai World becomes a ghost town.

Once the social safety net is in place, SNAP, millions added to SSN, Section 8 rent assistance, once everyone is safe in Uncles arms, THE VOTERS WILL APPROVE AN INCREASE IN TAXES. The Repubs will be chopped liver in about two weeks. The Tea Party has infiltrated the core GOP.

The SEC of defense is already recommending cuts to spending. The Repubs may have enough of a majority to prevent real Healthcare reform, (remember when they stood up with the lobbyists?) Obama will have both houses, and enough clout to keep the Libertarians on SCOTUS from countermanding his orders.

Remember automobiles can run on NatGas which is dirt cheap, but once oil goes to $50 and Dubai World is a ghost town, there won't be any royal Saud family to set prices. But don't buy solar until after the Chinese have offloaded their inventory. In fact don't buy stocks at all.

Finally the for profit education system might be interesting if you could figure out who the survivors will be. Right now the regulators are warming up. Wait until the dust settles. The problem is they're not that different from the old education system, and that wasn't working either.

Anyway score a huge Obama win, and figure out your investment portfolio that way, but be careful, Healthcare isn't a slam dunk, Defense either, or Education. Cheap energy will destroy alternative energy. Remember the first Great Depression, people were installing electricity, they had radio, the automobile, it was a technology revolution, and everyone was poor as dust.

The Republican Portfolio

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