ETF – Using ETFs To Profit From Obama’s Plans
The Dynamic Wealth Report
May 6, 2009
Can You Profit From Obamanomics?
by Corey Williams, Editor
The marching order of the Obama administration is “Holding true to
America’s ideals”. Over the last 100 days, they’ve tried to do that… and
more. I’ll tell you this much, the last 100 days have been anything
but
uneventful.
And I’ve got to tell you, in true Obama style… I’m hopeful.
President Obama is a man on a mission. He’s already made a significant
impact on a few areas… like the economy and foreign policy. And he’s
working his sphere of influence over a few others.
It’s great news for us, because every move he makes gives us a few great
investment opportunities (but more on that shortly).
Let me make a small confession, while I’m hopeful, I’m not a full blown
Obama maniac. I will be if my investment account has jumped in value by
the time he’s left office. But for now, I’ll have to leave the bank
account judgment for a few years down the road.
Here’s what you need to know.
The 44th President got started with a bang. Signing the largest
government spending bill ever, “The American Recovery and Reinvestment
Act” certainly made some noise. It’s a real bargain with a total price
tag of $787 billion. It’s loaded with tax cuts, funding for “shovel
ready jobs”, and social spending.
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It’s geared to head off a bad recession before it turns into the next
Great Depression.
The good news is it seems to be working. We’re seeing the first signs of
economic improvement. Now that imminent doom has been avoided, Obama’s
broadening his horizons.
He’s made a call for a “new foundation” for the American economy. The
foundation includes broad changes in healthcare, climate change, and
overhauling the culture in D.C. and on Wall Street.
Not a bad idea, but I’m worried about the unintended consequences.
Healthcare reform and cap-and-trade on greenhouse gases are two hot
topics. And they’re an economic minefield that must be navigated
carefully.
Your healthcare in his hands.
The long term trend of rising healthcare costs must be held in check at
some point. And I’ll be happy when the game of “pass-the-buck” on needed
reforms comes to an end. However, if healthcare reform moves too
quickly, we could see costs skyrocket. This could strike a serious blow
on our fragile economy.
An appropriate balance needs to be struck.
Then, and only then, will health care reform provide a boost to long
term economic and social prosperity.
Greenhouses gasses
The proposed cap-and-trade of greenhouses gases is an entirely different
ball of wax. As it looks now, I’m not a fan, and you shouldn’t be
either. Cap-and-trade is just a backdoor tax on energy. It will do
nothing but drive up costs at a wide range of companies.
First up will be the utilities. The huge costs of lowering CO2 emissions
will be passed along to the consumer. Can you imagine the strain on already
tight consumer budgets? This isn’t what we need while facing a slowdown
in consumer spending.
But I can’t completely dismiss this as a long term positive.
Forcing the hand of companies to rethink the way we produce energy
should lead to innovation of new technologies. And new tech has always
been a driving force for economic growth.
Balancing risks to the economy in the short run with the long term
benefits will be tricky. If they can pull it off, this could be a home
run. If they don’t, we could see it contribute to higher costs and
inflation.
In a best case scenario, the “new foundation” for our economy can provide
new business opportunities. In the worst case, it might derail economic
recovery. I’m an optimist and hopeful Obama’s plans will create new
opportunities. But it’s going to require a lot of hard work and
foresight by our government.
So how do we make money from Obama’s plans?
I’ve been discussing some of the areas where money will be made
over both the near and short-term. Keep an eye on these sectors and
subsectors for trading ideas.
If you’d like to get my thoughts on where you should put your money
right now, take a look at my Sector ETF Trader.
You can read all about
it here.
• Orange Juice ($0.88 per pound)
The sweet elixir that graces breakfast tables the world
over is starting to climb in price. This may be a kneejerk reaction by
the market over dumping accusations being leveled by US producers
against Brazilian producers. Legal action is pending… and that makes
everything more exciting.
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