In the context of economic uncertainty, financial system turmoil and a major election year it’s not surprising the market has been all over the place.
But as things begin to become more clear we expect investors to be more willing to make commitments.Â The fact that Obama has rolled in the past several primaries and now leads in delegates is beginning to feel like a leader for the democrats has emerged.Â Texas and Ohio could rock the boat but again it feels like the campaign message around "change" has stuck for Obama and we are past the point where that momentum can be stopped.
We are far from political experts but as the election outcomes sort themselves out investment scenarios are easier to consider.Â
Oddly we are most bullish on the prospects for what an Obama victory would do for the US markets.Â There’s not as much difference in the economic policies between democrats and republicans as their once was.Â Although the economy and the financial markets need some cleaning up this will happen under any election scenario over the next 12-18 months.
What we like about an Obama victory is that it can very materially change the world perception of the United States which has suffered terribly under the Bush/Cheney administration.Â We know that deficits can lead to weak currencies but in the case of the dollar a healthy part of the weakness may also be a reflection of the lack of confidence in America.
We’re not naive enough to think that Obama will change the country overnight or believe that he won’t make mistakes.Â But a figure like Obama is inspires an image of the U.S. as a place where equality, opportunity and possibility are very real.Â
A little less uncertainty and an improved appetite for things American, including the dollar, should help the market recover over time.Â We also don’t think current low valuations are "deceptive" at all.Â While some estimates may still need to come down we are still looking at sub-15 P/E ratios in most cases.Â In the crash of 2000 we had stocks that were trading at that multiple of *sales.*Â
Count us as constructive.Â Our top positions continue to include DELL, INTC, AAPL, CREE, ADS, and MSFT.
— Kris Tuttle