Rathbun: An election of Titanic proportionsWritten by Gary Rathbun | | GaryRathbun@PrivateWealthConsultants.com
Well, this is my last column before the “most important election of all time.” I feel like I am on Titanic, after we have hit the iceberg, and now must choose between two different captains who try to get my vote by telling me what song they are going to have the band play while we sink.
Each is promising new entitlements and a deficit reduction, easier money and less inflation at the same time. Such a medley of contradictions adds up to nothing and offers me as the voter nothing more than a juxtaposition of slogans — in other words, an insult to my intelligence.
Overall, if you look at history, it makes little difference if a Republican or a Democrat is in the White House with regards to the S&P 500. It is, however, a different story from a sector analysis.
If a Democrat is elected, traditionally the Info Tech, Industrials and Healthcare sectors have had higher returns. If a Republican is elected, traditionally the Telecom, Utilities, Consumer Discretionary and Consumer Staples sectors go up.
Now, we must take into consideration the fact that we have never had a national debt of $16-plus trillion with projections going to $20-plus trillion during the next four years. We have never had a fiscal cliff staring us in the face for the next 60 days and we have never pumped so much digital money into the economy as we have the last several years.
Even so, this does give us an idea what to go long on and what to short. Either way the election goes, American business wants some certainty as to tax laws during the next 12 to 24 months. The market hates uncertainty and that seems to be all we have today; neither candidate has a plan that will work and businesses know it. Most of the companies I work with are putting together strategies that are nontraditional and geared toward the worst-case scenario.
Individual investors need to engage in the same types of strategies, i.e. be prepared to short sectors, go long on other sectors and have the flexibility to use unconventional avenues. Something I will cover in a new column in the near future is the use of other currencies for traditional investments in a nontraditional way. For now, however, suffice it to say the “new normal” for investing will involve many new things that are not normal for most investors today.
Regardless of who wins the election, understand there will always be opportunities to invest and make money. It will take a lot more work and some serious discipline to stay with a strategy that may take some time to pay off but the reward will be there.
Remember, there were a lot of seats left empty in lifeboats as Titanic sank. For various reasons people chose to go down with the ship. You have the same opportunity. You can keep telling yourself the government will do something to save us and listen to the band play or you can take matters into your own hands and accept the inevitable that we are taking on water in a big way and choose to survive.
You can bet that members of Congress and the administration, whichever party wins, will survive and gain in wealth. You can too. Find a lifeboat and climb aboard. This is reality. Ayn Rand said you can avoid reality but you cannot avoid the consequences of avoiding reality.
Titanic is America, the water we are taking on is the ignorant economic policies that we have had for a long time and the politicians have been air-lifted off. They are telling you and I that we need to stay on board, that everything will be alright and they care about us very much. In the meantime, the band plays on.
On Nov. 6, you help choose the song.
Gary L. Rathbun is the president and CEO of Private Wealth Consultants, LTD. He can be heard every day on 1370 WSPD at 4:06 on After the Bell with Brian Wilson and the Afternoon Drive, and every Wednesday and Thursday evening at 6 p.m. throughout Northern Ohio on Eye on Your Money. He can be reached at (419) 842-0334 or email him at firstname.lastname@example.org