News Releases

George Bush Elected to 2nd Term
Investment Implications

Geneva, November 3, 2004: If the market likes certainty, it got it with the reelection of George Bush. There should be no big policy surprises. Look for republican, free-market type policies to rule, especially on the healthcare and retirement front. More burdens put on the individual to control costs and plan ahead. This will be good for healthcare stocks and financials. Also, Bush will likely continue to push for tax cuts to stimulate the economy. I think this is the right way to go. I am also excited to see if his timing will be as good this time around as it was with the two major tax cuts of his first term. I believe this will leave to job creation and spending and support GDP growth in the 3%-4% range next year. I also look for job creation to pick up as well. This should be a much better term on jobs front for President Bush. It had better be as there is no "We inherited a recession." excuse. Finally, there probably are too many terrorists happy with the outcome which is good for national security.

The negatives are mostly related to oil price policy and the deficit. Oil prices need to come down and Bush needs a plan to put the markets at peace. My valuation on integrated oils suggests the market is discounting oil to about $30-$35 per barrel. That may prove to be high if peace is maintained in the Middle East. Further, If Bush's economic policies don't produce growth and income, the deficit will continue to balloon. This will cause to the dollar to drop. While it is good for US based exporters it could lead to a temporary blip in inflation. This will be tough on bonds, interest rates and discount rates for stocks.

Finally, ethics and moral values played an important role in the election outcome. Businesses that need to shape up had better do so quickly. The Bush Justice Department has a mandate to continue to clean things up.

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