Four new beginnings I’d love to see from the Obama administration:
As we close the books on 2008 and Bush administration, it’s time to look forward to the Obama presidency for an era of change. This isn’t a political column, so I’m not going to go over the good, the bad, and the ugly of the incoming or outgoing president.
Instead, I’m looking forward to real movement in key economic and policy spaces, changes that will give lasting effect to you as an individual and as an investor. So take note because, if some of these changes take place, some very specific companies will likely be impacted:
Create a win-win situation for the auto industry.
The “win-win” idea is a biggie for me, in politics, in business, and even in my personal life. Mr. Obama, you seem to subscribe to the win-win idea, too.
And the auto industry is a great place to start. Sure, there have been missteps, and preserving the status quo is probably not an option. But the demise of the auto industry and its manufacturing base would be a huge hit: Not only for the unemployment it would cause, but also because the implied failure of America’s manufacturing competence is a total no-go.
If Ford and General Motors can somehow climb out of the cellar, keep an eye out for their cars in the grocery-store parking lots and car-pool lanes. Maybe the combination of new thinking and patriotic duty will make people want to buy American again. Which means these stocks would be good buys right now, considering how low they are. Sometimes bounce backs can be seen on Main Street before they can be seen on Wall Street.
Create a win-win situation for distressed homeowners.
We can’t stop with the carmakers, that’s clear. No point debating the reasons why so many homeowners are in trouble; instead, we need a solution that shares the blame—and shares the hit—between all parties involved. So plans like the one currently advocated by the FDIC to reduce rates and balances (but keep people in their homes) will help stabilize things, and probably cost banks and investors less than the alternatives.
That means financial institutions like Bank of America and home-building stocks like Home Depot would bounce, too. I know I used to have to wait in long lines at Home Depot, but lately I can just walk right up to any of the open cash registers. This turnaround might take a while, but if the real-estate market does rebound, so should the companies that have suffered from the disaster in the first place.
Bring back the “peace dividend”.
We’ve almost forgotten how good we had it in the post-Cold War nineties. Sure, there were still conflicts around the world, but not having to gear up for global thermonuclear war with the Eastern bloc? That was huge. Resources and good capital could be used for other things. We even had a Federal budget surplus by the end of the decade.
If the war ends, so does all the “patriotic” spending related to it. That means the defense industry, while not experiencing an outright crash, would see a significant slowdown. We’re looking at you KBR and Halliburton.
Tame the health-care tiger.
Now more than ever, it’s time to make real, lasting change to the health-care system. It really grinds me that as good manufacturing, construction, and private sector jobs are going bye bye, we’re still adding health-care jobs (and government jobs, too).
Mr. Obama, please find a fix that focuses on real health-care cost reduction, not just shifting the burden somewhere else (like to taxpayers, for instance). We need to see more efficient and effective use of what’s already there. Real change will help all businesses across the board, but I see a few, like NextCare—a division of Quality Systems, Inc. benefitting, as well as bigger IT infrastructure companies like IBM and Hewlett Packard.
