A Bushel Full for Bush's Next Four Years

Andrew Lucas was elected on Nov. 2 to his first term as a committeeman in the largely Democratic township of Manalapan, N.J., even though he made no secret of his allegiance to George W. Bush.

Lucas believes that Bush's re-election is also likely to have little impact on his day job as a portfolio manager and head of Lucas Capital Management Advisors, LLC.

"Presidential policies in general are given a lot more weight than they deserve," says Lucas, CFA, CFP. And he adds, "Clients are not paying me to be partisan."

The market rally immediately following the election, he says, was one of relief that political uncertainty had ended and that there would be no legal wrangling over recounts.

Like many other professional money managers, Lucas believes that whatever long-predicted effect the Bush re-election might have on investments such as defense or financial services has already been priced in. "I just don't see a huge positive for the market for the next couple of years," he says.

While portfolio managers might be relieved that Bush, with his avowed pro-investor policies, was elected over Kerry, not all are doing backflips for joy.

"We're in an economic recovery, arguably in the later stages of one," says Richard A. Weiss, who manages $7 billion as chief investment officer for City National Bank in Beverly Hills, Calif., a subsidiary of City National Corp. (CYN). "We're still looking for single-digit returns this year."

Money managers who see mediocre returns ahead for the U.S. stock market are using one or more of these strategies: going defensive with utility, dividend and energy stocks; seeking growth overseas; and relying on alternative investments in such vehicles as private gas or timberland partnerships.

Weiss says the economy could still grow for several more quarters, but he's concerned about a recession further down the road. For the past 18 months, the portfolio he manages has been overweighted in industrials and technology, but he has taken those profits off the table. Now he is looking to utilities and natural resources, investments that typically do less poorly than others in a slowing economy.