Seeking Stocks Beyond Washington's Reach
This post appeared Tuesday on RealMoney . Click here for a free trial, and enjoy incisive commentary all day, every day.
At the start, I will admit to being a political junkie. I follow elections as if they were baseball games, complete with snacks and adult beverages. The electoral and legislative process fascinates me, usually in its absurdity. What I am not a huge fan of, however, is when the markets become overly politicized. Politicians will always have some impact on the financial markets, since they set economic and regulatory policy, but the current environment is reaching the point of the ridiculous.
Government influence and participation in the markets is at a level I have never seen in my career. It seems that every day the president or a congressional leader makes a speech or remark that changes the direction of the market.
New regulations are coming from every level of the government, and this is changing the structure and mechanics of the market itself. It complicates the process of picking stocks and choosing investments to build or protect capital. In addition to understanding valuations and finance, you need to be able to guess what the federal government might do and how it will affect your decision.The scramble to fix the financial crisis and also fix the blame is creating an increasingly anti-business climate. It is coming from both sides of the aisle as well as from various federal agencies and the Treasury. The threat of new regulations and taxes is making business very hesitant to expand or invest for an uncertain future. Add in the various poorly thought-out, highly politicized green energy policies, and it becomes very difficult to pick investments for the long term. To avoid the possible negative consequences, an investor needs to stay away from industries that have heavy regulation or government involvement. This rules out banks and other financial institutions almost entirely. Many of them are cheap on the numbers, and ordinarily I might consider them a screaming buy. I have been very cautious to act with these stocks, and government regulations and policies are among the biggest reasons for my caution.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV