
I've been following the election closely for two years. For the most part, politics is a hobby of mine, but in this year's election my interest went much deeper.
I recognized very early that the 2008 vote would be monumental on so many levels and investment opportunities would abound. I even outlined the impact of the policies of each candidate on the market in an election gallery.
Now that the results are in with the Democrats taking significant control of the executive and legislative branches, I want to drill down and explore one investment idea that I believe will ascend above all the rest.
One common theme with all Democrats is that spending is sure to increase. Democrats are firmly in the Keynesian camp of using government spending to solve economic problems. We will see large government expenditures in the short term from the new administration.
Can anyone say "inflation"?
So much of the market is focused on deflation with current valuations based on the expectation of deflating prices. While it's true that the economy is slowing, I am more concerned about inflation.
Now, with a Democrat in the White House, I am convinced that the way to make money in the market is to bet on inflation. Vast sums of dollars will be printed and distributed into the economy to stabilize it. Doing so will weaken the U.S. dollar, increase interest rates and create inflationary conditions.
Front and center with inflation will be two commodity trades: gold and oil. I am not a believer in gold, so I'll stick to the oil trade. If you want to make money in the early stages of the new administration, I suggest you position your portfolio to profit from higher oil prices. That means owning oil stocks, and there are several names to consider:
I am a huge fan of Chesapeake Energy (NYSE: CHK), Diamond Offshore Drilling (NYSE: DO), Transocean Inc. (NYSE: RIG) and Devon Energy (NYSE: DVN).
All of these names will benefit as oil prices recover from their recent collapse.
If you are uncomfortable owning individual names, you can invest in the oil sector by investing in exchange-traded funds (ETFs) like the ProShares Ultra Oil and Gas ETF (AMEX: DIG).
DIG is constructed to correspond with twice the daily performance of the Dow Jones U.S. Oil and Gas Index. The fund uses leverage and other techniques to achieve its objective. Investing in the fund entails a high degree of risk and is not for everyone.
The election was truly historic for many reasons, but I am mostly interested in the market ramifications of the new administration. The highest degree of certainty I have at the moment is that inflation is likely to return in a major way.
As such, investing in oil is the single best way to profit from the results of the election.
Jamie Dlugosch is a contributor to InvestorPlace.com.











Reader Comments (Page 1 of 1)
11-11-2008 @ 6:05PM
germs said...
So.... what your saying is that Bush is really a democrat. Since
under his watch the deficit has grown to 11 trillion dollars, due to
massive spending.
Basic goods have increased and the standard of living has dropped.
Hey, jamie how do youspell republican...H-Y-P-O-C-R-I-T-E
11-11-2008 @ 7:23PM
St. Peter Charlie said...
Hi Jamie.....I agree completely with Douglas/McIntyre....I have some questions.....
1-Why don't all of the "bitchers" wait a reasonable time to attack...obama attackers show themselves for what they are.....sore losers....who just can't bring themselves to admit that the R's have screwed us royally and now the R supporters are ashamed to admit their bad judgement.
2-Why aren't people spending their time making suggestions that might help instead of grousing and bitching. Often times, the simplest and best ideas go by the wayside because people always think that their idea has already been thought of.
3-Give Obama a chance....officially, he can't "report for duty" until the 20th Jan. 09. Even so....he is moving behind the scenes to set up better i-net systems and continues to work to pick the right people for his administration/cabinet.
4. Just what have you been doing to solve our problems....and don't give me the "I'm already working to get rid of Obama" crap....he wasn't involved in creating this mess....only our good old trustworthies....Clinton...who absolutely charmed us and appeared to look the other way while ENRON cooked the books....then Bush who wanted prove what a tough guy he was and make his rich friends richer so....he looked the other way and even eliminated what oversight we had so that the real-a-bastards could sell million dollar houses to people who couldn't possibly pay for them....hell...they'd even throw in the Brooklyn Bridge for another lousy $50 grand.
11-11-2008 @ 9:33PM
Tom Barlow said...
After the republican administration steered us head-on toward D-e-p-r-e-s-s-i-o-n...
11-12-2008 @ 2:50AM
Allie said...
for the past 2 years it has been Democrats in congress. The President can't pass a budget without congress. My suggestion is to head this off and vote in a new congress...one which is not Democrat. That will balance things out.
11-12-2008 @ 3:41AM
BHarrison said...
Hmmmm . . . per the article: " investing in oil is the single best way to profit from the results of the election."
In retrospect, wasn't it the commodities traders who apparently manipulatively drove the price of petroleum to horrific levels . . . and now that the commodities market is being hit with the economics of the meltdown, the price of gas has gone from $4.00 to $2.00 a gallon. So the arthor of this article supports a return to the market inflated value of petroleum.
Inflation is a "tool" used by government to "adjust the economy". They can't dictate "wage reductions"; but they can accomplish the same by instituting inflation, which has the same net result, esp. for Americans on a fixed hourly wage or fixed salaries. Who is THAT going to benefit the most? Well, it will be the wealthy who have the money to divert to more profitable investments . . . right?
Everyone is "picking the bones" of the middle and lower classes . . . and the bones are getting pretty clean at this point. There isn't much let to "pick" is there?
The writer of the article is unequivocally an advocate of "market exploitation" . . . gosh, isn't that a big part of what caused the economic meltdown. Where is the integrity in all of this? It looks like nothing much has changed with these "market guys" . . . exploitation to the max.
11-12-2008 @ 7:56AM
Jerry said...
Inflation - The Dems tax money and give it to the people. The Rebs take tax money and give it to the corporations. Hum, And who is the good guy here ! Both cause inflation. The net effect is that the Reps have reduced our hourly wages by just taking them back in taxes and returnig them to the corporations while the dems take the money and drive inflation by making too much money available. BOTH PARTIES ARE AT FAULT HERE ! WE THE PEOPLE NEED TO TAKE BACK OUR COUNTRY AND RETUTN IT TO THE PEOPLE. WE ARE THE LIFE BLOOD NOT THE CORPORATIONS. THE EVIL LIES WITH WALL STREET WHICH MAKE OUR ECONOMY A FANTISY. WALLSTREET SHOULD BE REMOVED FROM THE WORLD !
11-12-2008 @ 7:58AM
BHarrison said...
Well, if the Democratic party is supposedly the party of the "working classes, and if the working classes are mostly FIXED hourly or salaried people who will be HURT THE MOST by INFLATION, then how are they helping the working classes by causing inflation.
Isn't this some what of an oxymorn of sorts? Democrats -- the people's party -- inflation -- severe hardships on the people -- vicious cycle. The only people who can handle inflation the easiest are the upper income and wealthy. And America more and more becomes a two class society . . . the wealthy and the impoverished. Let me know if you have a solution to all of this.
11-12-2008 @ 8:18AM
BHarrison said...
Jerry, I think that "Wall Street" is a critical part of our economy as a market place for raising money for corporations and for Americans to invest their monies. We have to have a "market place" for economic activity. The problem with Wall Street is the substantial lack of ethics, and integrity that has resulted in UNPRECEDENTED FRAUD.
While I am not in favor of over government regulations, I do believe that the government has an obligation and responsibility to establish basic minimum standards and requirements, and to provide adequate oversight and regulation of the market place. The SEC has been a TOTAL FAILURE because it wound up emulating the FRAUDULENT corporations.
Everyone now sees the economic and social damage that is caused by White Colar Crimes" . . . and the government must vigorously enforce prosecution of White Color Crimes with penalties being sufficient to be commensurate with the damage caused by the FRAUDS, and with HARD jail time for the guilty in order to act as a deterrence to this type of crime.
The past "slaps on the wrist", token fines, and allowing the companies to "not admit to any guilt" was merely conducive to promoting FRAUD . . . the token fines became "just a cost of doing 'business'.
There will always be risks in the stock market . . . that is what it is about, taking capitalistic risks; but at least we should be able to take the FRAUD out of the equation.
11-19-2008 @ 10:45AM
SANDY said...
we judge now becaue of the FACTS:America-where are all the reporters?
How long did it take Islam & their money to find a canadiate for Pres of the US It took them about as long as it did for them to place a senator from Illinois & Minnesota!
Where were the reporters recalling THEIR statements that they wanted to destroy our nation? It took radical Islam about the same amount of time to find a canadiate for Pres. as it did to create a large Muslim enclave in Detroit! It took them about the same amount of time to find a Pres. Canadiate as it did to place radical wahabbist clerics in our military and prisons as chaplins!
Where were all our reporters that should have been warning us of the radical intentions toward our country by Muslims? The idea was to find a candiate that could get away with lying about his father being a "freedom fighter" when his father was actually part of the most corrupt & violent gov. In Kenya, Africa's history.The idea was to find a candidate with close ties to The Nation of Islam & the violent overthrow of goverments in Africa, a candiate who is educated amount the white infidel Americans but hides his bitterness and anger behind a superficial smile.
Islam wanted to find a man who changed his name from Barry to the Muslim name Barack Hussein Obama, & dares anyone to question his true ties to Islam under the banner of "racism". Nuture this candidate in an atmosphere of anti-white American teaching and surround him with Islamic teachers is the goal.
You then provide him with a bitter, anti-white, anti-American wife, who said she was never proud to be an American until her husband was nominated for the Presidency as a Democrat, and supply him with Muslim middle east connections & Islamic money.
Allow the candidate to be clever enough to get away with his anti-white rhetoric and proclaim he will give $834 billion taxpapers dollars to the Muslim/Communist controlled United Nations for use in Africa. Where were all the reporters to revel these important item's to the American people? And you think this "man" cares about clean air? THINK AGAIN!
11-19-2008 @ 11:06AM
SANDY said...
To st peter charlie: the housing problem started with Pres. Carter: under his admin. they started the program to help people obtain homes with easy to get loans. It takes years for goverments actions to catch up to the better or worse of the present time. Everyone wants to blame Bush, however did not cause all of this. At the time of Carter the majority of those seated were Demo-craps! we are really in for more than anyone can imagine now. Read what I wrote earlier about Obama. He is a liberal totally dedicated to the Muslim cause and he hates whites. He said this in his own book. He plans to give millions to Africa. Dont' bother to think about the gov. being in the red, I just don't understand one thing? how do we give money away that we don't have? If he were serious about bettering the ecomany, he should take the allowance to change the decor in the white house and put it into the community. If it's not broke dont fix it! He already has million dollar new car, what was wrong with him using Bush's car? Bush had more people against him then Obama has! Our gov. only knows to waiste and pork barrel. What we have to worry about now is not being forced to be Muslim jailed or killed. All of our money will go to Africa. This "man" does not have the US in his best intererest. His interest is in the terriost muslims as he gives them alot of money and that's a fact. He hates us and that's a know fact. The problem is people only go by what they hear on tv. The tv only tells you what they want to hear. They talked about O alot and hardly anything about McCain. CNN did give the info about O giving thousands to the company that was signing up voters who were either dead or from the phone book. This man is evil. He is smart and sly, you just wait, it won't take him long to do what he has set out to do. One world gov. that is Muslim. He was educated here, but his faith and passion is liberal comunist and Muslim. Say by by to your money, things will only get worse. I think he may be the anti-christ from all I've read. If you want the truth about what is really going on, one good free book is from Newswatch Magazine it's from the church of God Evangelistic assoc. in waxahachie Tx. There you will get the facts and only the facts. Any Christian based books that keep up with everything will tell you what this man is really all about. I'm hoping and praying for the best but I really doubt it. we are really in the end times, but the signs that the Bible says will be, and those signs are here and now, especially now with O being elected