Friday, July 13, 2007
The 2008 election is more than a year away, and yet the media is already covering the campaign trail as if the rest of the world has ceased to exist.
Practically every day, there's a new announcement about whether or not Hillary Clinton or Rudy Giuliani believes in this or that, none of which is particularly relevant or interesting to me.
What does interest me, however, is knowing what legislation we're likely to see in the years to come. And when it comes to this kind of information, I don't follow the words that come out of politicians' mouths, rather I follow where their money goes...
After all, whether you're talking about presidential candidates, senators, or representatives, you're talking about the people who make the laws in this country. And if they've invested in a particular sector, do you really think they're going to pass legislation that will hurt their investments?
Nope, me neither.
Consider for instance, one of the world's largest, most efficient public oil companies Chevron (CVX). Regardless of your feelings about the oil industry, CVX has been a great stock to own in the past five years, rising more than 100% during that time.
Oil prices have risen substantially during that time period. Was it because of instability in the Middle East? Or was it because the world is running out of cheap oil? Or was it because demand has skyrocketed? It's probably all three.
However, one thing is for sure: some 32 members of the U.S. Congress own Chevron's stock. This isn't ownership through mutual funds... but ownership through stock purchases.
Chevron isn't the only oil stock our representatives like...
Thirty-one own British Petroleum and 22 own ConocoPhillips.
So regardless of the tough talk about "cracking down on oil's profits" I don't think we're going to be seeing any laws that hinder the oil industry in the near future.
What about tobacco?
As much as you'd like to think tobacco is a beaten down industry since the massive lawsuits of 1998, you're totally wrong. Tobacco giant Altria (MO) has seen its share price more than triple since early 2003. But then again, 25 members of Congress own it stock.
These are the same people who voted to bar large, multi-state class-action lawsuits from state courts in 2005. From now on, any class action lawsuit worth more than $5 million will take place in a Federal court. Historically, federal judges have not been as open to these sorts of claims.
Next week, I'll explain how to profit from Barack Obama's love of pickles and just how much Hillary Clinton loves real estate. Until then...
Basic materials continue to dominate the market... new highs stuffed with steel producers, mining conglomerates, and Big Oil.
Tech blue chips Intel, Cisco, and Nokia reach new 52-week highs.
U.S. dollar slides to all-time low against the euro.