Politics and the Economy

Believe it or not, there is already intense speculation occurring about the 2012 presidential election, with Republicans trying to capitalize on recent anti-Democratic sentiment and the Tea Party in full swing.  While much could be said about the various Republican hopefuls and their chances, it is interesting to observe the effect all the political talk has on the market.

The most obvious immediate consequence is that the media has temporarily forgotten about the economy, focusing instead on Obama's religious preferences, the viability of Newt Gingrich as a presidential candidate, and  football.  Though the recession is "officially over," several prominent economists still predict a double-dip, and depending on Obama's next economic actions, this economist may agree.  If Obama carries through with his promise to provide even more stimulus, look for investors to keep driving up the price of gold.  Also, look for a short-term spike as with the funds will likely come government-sponsored good-news and a bright outlook.

Long-term gains might be available in the transportation and civil engineering sectors as Obama promises to dedicate more funds to infrastructure, especially highways.  Elsewhere, look for the volatility we have become used to.

Enough of the fluff; what securities are on the rational investor's radar?  In the past month, I've held my position in Devon Energy Corporation (DVN), and suffered close to 10% losses because of it.  However, I maintain that DVN is in for large growth over the coming months.  Buying this stock any time over the next couple of weeks would be beneficial to the mid-range portfolio.  I have also held Dynamex (DDMX) for the past month, which has resulted in a recent 9% gain.

The most recent addition to my portfolio is Healthways, Inc (HWAY), which has an excellent potential for mid-range (2-3 month) growth as it has a low P/E ratio, Beta of 1.54, and analysts estimate 30% gains over the next year.  Wait for this stock to retract its recent gains a bit before buying, but keep it on your watchlist.

The rational investor has indeed returned, and will write more frequent articles over the coming weeks.