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May 4, 2009
In the run-up to the election and after, we purchased the following stocks based on broad economic trends, nothing to do with Obama - or so we thought.
RIM. Research in Motion. Purchased at $60 - $65 CDN. Dropped precipitously and April 2, 2009 announced earnings and projections that exceeded all of 2008. Currently trading at approximately $90 CDN. Apple and RIM are the future. They will continue to penetrate into the cell phone market. Ford, F, purchased at $3.45 US announced losses that were less than analysts predicted. Company is trading at +/- $6.00 US. Expects to be profitable by 2011. Ford had a rescue plan for their business. Their competitors, G.M. and Chrysler did not. General Electric, G.E., purchased at $9.50 US. Dropped after the elections. Trading at $13 US. G.E. has a footprint in almost all energy technologies including nuclear. President Obama has set a target of 10 years for the continental US to achieve energy self sufficiency. Presently the US consumes 25% of the world's energy reserves but produces 3% of the world's power. An investment in G.E. is almost a no brainer.
We suggest that in the next 100 days, energy prices will rise as the band between energy consumption and inventories expands. As energy prices rise we suggest the Canadian dollar will follow. We recommend the purchase of ARC Energy Trust units currently trading at $16.00 CDN or companies producing in the Alberta Oil sands (Suncor). April 20, 2009 the spectre of another pandemic is raised when swine flu is detected in Mexico, the United States and Canada. No vaccines have been approved for swine flu to date. By May 4 Chrysler is in Chapter 11. Fiat is making like a buyer but also flirting to acquire GM's OPEL brand in Germany. GM also has brands such as Saturn and Saab for sale. It is our opinion that Fiat will succeed in purchasing Chrysler's assets in bankruptcy and OPEL outside of bankruptcy.
Investing in Obama has a lot to do with investing in the man. His administration has gone on the record to dismantle GITMO and pull out of Iraq. His refusal to condone interrogation tactics such as water boarding is entirely consistent with his policy that the end does not justify the means. To the apologists that say the tactics resulted in useful intelligence I would say, I hope so, although that is yet to be shown, otherwise the exercise would been without any value whatsoever. There is no issue that the law and conventions for treatment of prisoners has been broken. If any ill gotten gains resulted, that should go to mitigation.
Obama has clearly articulated his industrial and energy self sufficiency policy in the phrase 3-10-25. Chrysler did not have a transitional plan that moved the business towards the goal of energy self sufficiency in 10 years. Chrysler is and was a drag on the economy and will be allowed to be jettisoned. The retooling of the American industrial, manufacturing and banking base has begun.
