This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Investment Options for 'Fiscal Cliff' Bears

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 Lockheed-Martin (LMT - Get Report) is talking of an immediate layoff of 10,000 workers, according to Bloomberg.

Other big contractors like Boeing (BA - Get Report), Northrup Grumman (NOC - Get Report) and General Dynamics (GD - Get Report) also get downgraded in this case.

So would companies you don't always associate with defense, like Honeywell (HD - Get Report) and General Electric (GE). 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 Exxon Mobil (XOM), Chevron (CVX) and BP (BP), but big U.S.-based oil production outfits like Anadarko (APC) and Devon (DVN) are still going to sell what they produce, albeit at lower prices.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BA $134.80 0.00%
GD $141.13 -0.02%
HD $132.73 0.00%
LMT $232.72 0.00%
NOC $205.61 0.00%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs