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With power changing hands in Washington D.C., it may be time to change the money in your hands, Carmen said on Wednesday’s post-election On the Money. To build true affluence – not just fleeting assets – you’ve still got to invest, even when the market gyrations are enough to make you ill.
To shift your long-term investment strategy so that you take advantage of the next four years - and then some - stay with a diversified portfolio but consider making adjustments in your holdings to capitalize on an Obama presidency. Zachary Karabell, economist and president of River Twice Research, reminded that despite popular belief, the stock market tends to do better under a Democratic administration than a Republican administration. He and Joe Terranova, of Virtus Investment Partners, agreed that one place that is especially likely to get a shot in the ar, under President Obama will be infrastructure spending.
Obama will likely focus on regulating the markets, coming up with a new stimulus package and rebuilding the country’s crumbling infrastructure, Terranova said, which could include investments in the power grid and alternative energy. But be forewarned that alternative energy stocks are some of the most volatile investments going. Approach with caution.
You can play an infrastructure spending increase a little more conservatively with “stuff” stocks, Terranova said. That is, those companies that make “stuff that would hurt if you dropped it on your foot.” Think steel, concrete, lumber, other metals and commodities that would be used to rebuild our schools, roads, cities and so forth. And don’t forget about municipal bonds, Terranova added. As government invests in cities and towns around the country, you can hope to profit off the muni bonds it will issue. Just make sure you only buy investment-grade bonds that are triple-A rated, he said.
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