NEW YORK ( TheStreet) -- I've been willing to buy the conventional wisdom that some deal will be done to avert the "Fiscal Cliff." I even think it's an opportunity to get some
great companies cheap
As this was written on New Year's Eve, we still had no deal. But even if Congress treats the Jan. 1 deadline like the late Douglas Adams -- he said "I love deadlines. I like the whooshing sound they make as they fly by" -- a deal can still get done later this week, even next week, with minimal harm.
Yes, there will be a lot of uncertainty, and accountants will be churning out overtime. A final deal, reached this coming Friday, would doubtless hold taxpayers harmless for the complications. And everything in it would be a tax cut, while in 2012 Republicans are being told to vote for tax raises. It makes a difference.
I've told you what bulls should do in the event of a cliff disaster. But what should bears do, other than take Bette Davis' advice of "Fasten your seat belts, it's going to be a bumpy night."
Here are my thoughts, and I'd love to hear yours:
Sell Defense Stocks
: The least-mentioned provision in the 2011 deal creating the cliff is a 9% cut in the defense budget, starting tomorrow. Health care for soldiers would be cut, and
(LMT - Get Report)
is talking of an immediate layoff of 10,000 workers,
Other big contractors like
(BA - Get Report)
(NOC - Get Report)
(GD - Get Report)
also get downgraded in this case.
So would companies you don't always associate with defense, like
(HD - Get Report)
Business Insider has a list of the 25 largest military contractors, all available for shorting.
Sell Oil and Gas
: If the U.S. goes into recession it's going to hurt the price of oil, since we're the largest energy user. Unfortunately that's going to hurt a lot of U.S. companies since we're becoming one of the largest producers again. This is going to be bad news for integrated oils like
, but big U.S.-based oil production outfits like
are still going to sell what they produce, albeit at lower prices.