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The Obama Portfolio

Where to put your money—or some of it, anyway—in 2009.

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Illustration by André Carrilho   

Over the years, I’ve made a habit in this space of picking stocks for the year ahead on or around January 1. We’ve got no time for that now. Given the historic mess we’re in, people want to know where to put their money right this minute. Besides, Barack Obama has moved faster than anyone expected to announce his plans to lead us out of the financial wilderness, and those announcements create opportunities. If he’s going to shell out hundreds of billions of dollars to put people to work rebuilding the nation’s infrastructure, then I want to tell you which construction companies will benefit from that largesse. If he expects our nation to cut its dependence on foreign oil and go green, he’ll be instantly boosting the bottom lines of certain energy-related stocks. If you think he can solve the banking morass, how about the names of a few undervalued companies there, too?

But before we do any stock-picking, let’s focus on the firmament. The market’s been a miserable, awful place for months now, just a heartbreaker and a nest-egg cruncher. I know. That’s why I called for people to sell 20 percent of their stocks when the Dow stood at 11,300 on September 19 and then, with the Dow at 10,000, on October 6, said on the Today show that investors should take any money that they need for a major purchase in the next five years—house, car, college tuition—out of the stock market. I was pilloried at the time for inducing a panic, and I wish I had been wrong. But those few who didn’t label me the market’s Judas, and actually took action, sidestepped a 25 percent retreat, if you count from the recent bottom. Nevertheless, given that we are now down huge, with a new president-elect who actually wants to focus on rebuilding our economy, not Iraq’s, who cares about creating jobs, not just stuffing billions into bankers’ pockets, things are getting interesting on the long side again. While many regarded my sell calls as reckless—despite the fact that last I looked, it’s prudent to avoid losing a quarter of your retirement money—it would be just as reckless to stay so negative now, given the alacrity with which Obama is addressing the economy’s chaos and the sagacity of his focus on stopping unemployment before it goes double-digit on us.

In other words, happy days aren’t here again: The days of tossing your money in a Dow or S&P index fund and watching it go nowhere but up are long since over. I don’t expect any assault on the old highs anytime soon, if at all, during Obama’s first four years. I expect the holiday season to be dismal, and I see a slew of bankruptcies ahead of us in commercial real estate, travel, retail, restaurants, and the media. Still, Obama’s swift transition and desire to spend trillions to get us moving could prove that happier days will eventually beckon, at least for a handful of carefully selected companies. So, at last, it’s worth taking some sidelined money (note that I said some) and putting it back to work again.

Let’s take the new president at his word and bet that he really will put millions of people to work rebuilding America’s infrastructure. You don’t want to overthink this one. You can’t build without construction equipment, which means that Caterpillar, the world’s largest earthmoving company, will be a gigantic beneficiary of these programs. Here’s a company that’s so beaten up that it’s worth less than half what it was just a few short months ago. CAT’s stock was pummeled because of the sudden worldwide slowdown in growth, but major infrastructure orders from the federal government would go a long way toward reversing that. It doesn’t hurt that the company’s based in Peoria, the hardest-hit area of Obama’s home state.

Obama is committed to building out alternative energy, too. That means wind and solar. I say go with Quanta Services, a $16-and-change stock, which has major contracts to hook up alternative wind farms to the existing power grid and can channel solar power to where it does the most good. Quanta knows how to navigate the most difficult part of building out a new, cleaner energy system—placing the electric lines where they won’t be stopped or delayed by local governments. Quanta is one of those stocks that the hedge funds glommed onto as a way to play Obama’s triumph. Well, Obama won, all right, but the hedge funds are still getting crushed, and their endless selling has cut this stock to ribbons. It has lost two-thirds of its value even as it has continually topped Wall Street’s earnings estimates and is immensely profitable.


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