Will Investors Oust Obama? 4 Predictions for a Romney Victory

Video Transcript

Hi, this is Tony Sagami for Uncommon Wisdom Daily.

We’re now less than a month away from the U.S. presidential election, and the outcome is going to have serious implications for the economy, and for investors.

President Obama and Mitt Romney have very different economic plans, so depending on who wins, the next four years could play out in very different ways.

You have a big stake in the results. And I urge you to exercise your right to vote for the candidate who best represents you. However, whether “your guy” or “the other guy” gets more votes, there’s good news for you.

That’s because, whatever the outcome, you have access to a number of ways to guard and, more importantly, enhance your prosperity. Today I’d like to start exploring what we might be able to expect with one of those outcomes.

Will the incumbent or the challenger hold the nation’s highest job when we wake up on November 7? After last week’s debate in Denver, CNN reported 67% of debate-watchers favored Romney.

Romney shows an advantage when it comes to the economy, which is at the forefront of many voters’ minds. A recent Gallup poll revealed that 50% of respondents believe the economy would fare better in the next four years with a Romney victory, compared to 48% if Obama stays in office. And when it comes to the federal budget deficit, the same poll gives Romney a 13-point lead over the president.

With two more debates — and, certainly, many more polls — until the election, it’s still either candidate’s race to win.

Of course, the policies of presidents don’t always match their campaign planks. But based on the information we have available — from Romney’s platform to his performance in the polls — he is a very real contender to become the nation’s 45th president. And if that happens, I have four predictions on how a potential Romney presidency can impact investors like you.

First, a Romney victory would give a big, big boost to the stock market. The Republican Party has traditionally been business-friendly, and I believe that both corporate America and Wall Street will react favorably if Romney wins on November 6.

In 1989, the year George H.W. Bush took office, the Dow Industrials soared by 23%. A similar move would translate into a 3,000-point jump today.

Second, a Romney victory could prevent us from falling over the fiscal cliff — the automatic spending cuts and tax increases that are scheduled to take place on January 1, 2013.

If Obama wins re-election, our Republican-controlled House of Representatives may force us over the cliff. In order to protect yourself against that, you might want to consider some portfolio insurance such as put options or inverse ETFs. On the other hand, if Romney wins, Republicans will work hard to find at least a short-term fix for the fiscal cliff.

Third, no matter who wins, tax hikes are coming. I know Romney has pledged to lower tax rates by 20% across the board. But to pay for those cuts, he’s likely to eliminate some of the $1.3 trillion in deductions for individuals and corporations. For many Americans, especially those who have a lot of mortgage interest and charitable deductions, this could mean an increase in their overall tax bill.

As a result, municipal bonds and annuities could become more popular than ever.

Finally, our national debt is going to explode — even if Romney wins. He’s pledged to cap federal spending at 20% of GDP. But that’s only $400 billion a year short of Obama’s 24%. That isn’t a big enough difference to make any meaningful progress on paying down our national debt.

Our unmanageable debt load assures that the U.S. dollar will continue to drop in value. And that makes non-dollar denominated investments, like foreign stocks and bonds, even more attractive. In fact, some of the best places to put your money are rapidly growing Asian countries.

These are just a few of the investment ideas that come to mind if Romney is the one who delivers the acceptance speech this November. In fact, I’m putting together a guide to the specific stocks and sectors that can provide you with a potential windfall of profits under a new administration. So be sure to stay tuned to this space for all the details!

I’m Tony Sagami for Uncommon Wisdom Daily. Thanks for watching.

Tony Sagami is the editor of Blue-Chip Option Alert, a trading service designed to help investors profit from the seemingly unstoppable Asian consumption machine. He helps his subscribers tap into this potential through a variety of easy-to-execute strategies on global companies that trade on the U.S. exchanges that also do big business in Asia.

Tony is also the editor of International ETF Trader, where he shows members how to make money from trends taking place all over the world in areas like natural resources, gold, oil, commodities, tech, consumer goods and even in individual countries themselves.