Now that the democrats have won, lets try and project what the investment landscape will look like in the future. Of course there is no way of knowing how these events will unfold, but thinking outside of the box has a way of paying big dividends.
1) Immigration of Latinos will skyrocket: Since President Bush was not concerned with the number of illegal immigrants entering the country, with the democrats in power, the floodgates will open allowing in 10 million more immigrants.
By 2008, the Latino vote may be the deciding force that allows the democrats to re-take the White House.
So, what will be the investments of choice for 2008 and beyond?
1) Housing and Apartment REITs- Existing home sales will soar and new housing construction will rebound. First time home buyers (including immigrants) will eliminate the high inventories of existing homes. Existing home sellers will upgrade to new homes reducing the currently high inventories.
Those who cannot immediately afford a home will live in apartments. Apartment REITs will do extremely well. Rents will rise over time, and profits will climb 15-25%.
2) Consumer Discretionary Stocks- Embracing the American dream, consumer spending will soar to new highs. Retail and Restaurant stocks will do extremely well. New homes and remodeling will drive Lowes (LOW) and Home Depot (HD) to new all-time highs.
Car companies will do well, and Ford, GM, and Chrysler will rebound. Toyota and Honda will continue to do well.
3) Technology Stocks- Everything from new computers, to cell phones, ipods, and flat panel TVs will be in high demand.
4) Oil Stocks- Oil demand will rise as will investment in alternative energy solutions. With the new influx of immigrants, the quest to become energy independent will take much longer than expected. Reduced energy consumption because of hybrid vehicles will be offset by 10-15 million more new drivers. So, while vehicles become more energy efficient and use less gasoline, the number of new drivers will actually make gasoline consumption rise.
5) Commodities- Everything from food to uranium will be in high demand. Food products such as Corn (Ethanol & Food), Wheat, Coffee, will increase in price. Uranium and Coal will soar as the government looks for ways to cut back on the use of oil. Cement will be in high demand for new roads and repair, and construction will continue in China and India driving up prices for iron ore.
Potential Negatives
1) Health Care & Health Insurance- The costs of healthcare will soar prompting the congress and the president to push for a nationalized healthcare system. The socialized medicine policies that surfaced during the early years of the Clinton administration will resurface with a vengeance.
In 1994, the thought of socialized medicine was quickly dismissed and discredited. Beyond 2008, it may become a reality. Middle America is extremely frustrated with the high costs of health insurance, and while socialized medicine was perceived as evil in 1994, it will be viewed as the savior in 2010. If the democrats have a majority in congress and the White House, we will probably see universal healthcare.
2) Higher Taxes- This will be unavoidable.
