Stocks for a Romney Election Victory
Alexander is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Whatever your political position, it is important to recognize the effects government policies may have on your investments. That being said, this article is not meant to promote a particular candidate or take sides with respect to certain "hot button" issues. Rather it is meant to provide insight into which investments could post gains IF Romney wins in November.
Quotes in the article that form the different sections are directly from the Romney campaign's official website and not from the "liberal media" or "conservative talk radio." This article is also being published along with another article on a similar topic, Stocks for an Obama Election Victory, which lays out a prediction for an Obama victory instead. For the purposes of both articles only companies directly impacted are mentioned since there is so much debate over how the policies would affect the economy as a whole. To maintain a non-partisan look at these investments, both articles' first two paragraphs are nearly identical.
"Repeal Dodd-Frank and replace with streamlined, modern regulatory framework"
Just the mention of this law fires up both sides. Many Democrats do not think it did enough and want to expand the law to close what they claim to be loopholes. But most Republicans want to repeal and possibly replace it since they consider it burdensome on the economy. Regardless of their political affiliation, most investors agree that Dodd-Frank does impact the markets, meaning changes to the act mean changes in the markets.
Since Dodd-Frank is meant to most regulate the largest Wall Street firms, companies such as Bank of America (NYSE: BAC), Citigroup (NYSE: C), and Goldman Sachs (NYSE: GS) are likely to receive a boost in their share price if the law is repealed. People will debate what this means for the firms in the long term, but most agree it would mean a gain for the companies at least in the short term.
When Romney says that he wants to replace it with a "streamlined, modern regulatory framework," he is calling for what he considers a better replacement rather than a complete elimination of the law. However that replacement will almost certainly be less powerful than Dodd-Frank since both the Republican Party's and Mitt Romney's messages have been about deregulation over increased regulation. If and when Dodd-Frank is repealed or replaced with less powerful legislation, the largest banks could cut compliance costs and will no longer need to follow the other guidelines of the law resulting in at least short-term gains for bank investors.
"Support construction of pipelines to bring Canadian oil to the United States"
The debate over the Keystone Pipeline continues with most Democrats and President Obama opposing it for concerns about oil spills and the dirtiness of the fuel, and most Republicans favoring its construction as a way of reducing oil imports and creating jobs. The full construction of the pipeline is currently under further review but the southern leg has been given the okay, much to the dissatisfaction of environmental groups.
The owner of this proposed pipeline would be TransCanada (NYSE: TRP), which wants to be able to transport the Canadian Oil Sands crude oil to American refineries in the south to refine it. The company claims it would create 100,000 jobs but that claim has been widely criticized with some arguing the project would create less than a quarter of that with many of them being temporary construction jobs.
But Romney supports the project for the same reasons much of his party does and he uses it as one of his key issues. With those policies in place, the pipeline would be far more likely to get approved, especially if the Republicans can take control of the Senate. TransCanada could see an immediate share price gain followed by longer-term gains resulting from greater oil revenues. Being farther ahead in line would give the company a head start over its competition helping it to sell Canadian oil through newly constructed pipelines before its competition could increase the supply.
It's Your Investment, Use It
When Americans go to the polls in November they will chart a course for this country's future, one that will shape how and when we emerge from this downturn. But their choice at the polls will benefit the values of some companies while hurting the values of others. In a way, knowing the right investments allows one to bet on election results. Legally.
Alexander MacLennan does not own shares in any of the companies mentioned in this entry. The Motley Fool owns shares of Bank of America and Citigroup Inc. Motley Fool newsletter services recommend Goldman Sachs Group and TransCanada. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.