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The Investor
Selling Obama Short
If Barack Obama were a stock, would you be buying or selling?
If Barack Obama were a stock, would you be buying or selling? On the Rasmussen Approval Index History exchange, Obama Inc. (stock symbol "BHO") is already down from its January 21 price of 27 pct to 11 pct.
The usual disclaimer on investment vehicles, "past performance is no guarantee of future performance," doesn't apply in this case: there is no past performance, other than management's campaign to get you to invest.
Obama, Inc. has just taken over a long-established firm with two lines of products: foreign policy and domestic policy. Foreign policy has little upside; domestic policy, tremendous risk.
Foreign policy, in the age of Islamic terrorism, is primarily about the hard product line: safety and military success. While there is growth potential in the soft product line -- what the Europeans think of us -- that won't support the stock price in difficult times. And the two product lines cannibalize each other. Promoting military strength will make the Europeans unhappy, as, in the domestic line, will the Buy American provision in the "stimulus" bill.
The lead hard product is Iraq. Unfortunately for Obama, Inc. there is little room for growth in that line. The war in Iraq has been won -- won by the discredited former CEO, and won despite the specific advice of the current CEO. Iraq is now, or seems to stockholders, secure and democratic.
What can go wrong? Just about everything. It's the Middle East, after all. The problem for Obama, Inc. is that it has widely advertised that it intends to change the business strategy, so any failure will be attributed to the new CEO. And if the new CEO reverts to an approach more like his predecessor's, he will risk alienating his preferred stockholders, as well as the Europeans.
Obama, Inc. has a similar problem with Iran. The CEO has stated that it must not be allowed to develop nuclear weapons. But how is he going to stop it? By bombing Iran? Please. Through negotiations? Perhaps, and only perhaps, with a different president, but Iran's current president, Mahmoud Ahmadinejad, is eligible to run again when his term ends in August 2009, and who can say he won't be reelected? Successful negotiations have to be regarded as iffy at best -- not a promising growth story.
Obama, Inc. also has a problem in Afghanistan, which presents all the difficulties of Iraq in an even less tractable country. Honoring his sales campaign pitch, the CEO has announced he will send more troops to Afghanistan, but one of his most prominent stockholders has advised him not to "try to put Afghanistan aright using the U.S. military." What are the chances BHO can sanitize Afghanistan (the Soviets couldn't, and the Secretary of Defense has said the effort will be a "long slog") while keeping his stockholders happy? Slim to none.
The domestic policy line faces a different problem. The product is doing terribly. Business, and confidence, are down. Unemployment, and fear, are up. Fortunately for Obama, Inc., the problems originated on the previous CEO's watch. But now the pressure is on to produce change -- and not change the stockholders have to believe in, but change they can actually see.
Will Obama, Inc. be successful? Contrarians doubt it. The business strategy is to spend massive sums of money, but there are historical precedents suggesting that course will almost certainly fail. Any money pumped into the economy has to come from somewhere. There are only two sources, taxes and bonds, but they are really the same: the productive sector. The government can take money from today's productive sector, or it can borrow from tomorrow's productive sector.
An earlier CEO of this enterprise -- his name if I recall correctly was Ronald Reagan -- reminded us that when you tax something you get less of it, and when you subsidize something you get more of it. Taxing the productive sector in order to subsidize the unproductive sector, like a split-strike conversion strategy, may be good politics, but it's not likely to fix the economy. The economy may fix itself, but then again it may not, or may not for a number of years. Stockholders may not be patient.
Could Obama, Inc., long on rhetorical smooth talk and media hype, get lucky? Of course. But savvy investors don't bet on luck and hype.
That's why the smart money is selling Obama short.
Letter to the Editor View all comments (31) | Leave a comment
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Appleby| 2.25.09 @ 7:48AM
I would not touch Obama Inc. with a barge pole. I would rather take all my cash and spend it at Wal-Mart.
Country Boy| 2.25.09 @ 8:19AM
Hah! What a hoot!
Realistically though, zero could never be CEO of a publically traded company. Those folks are all vetted. No exceptions.
BobbyG| 2.25.09 @ 9:06AM
There is a third source of money: private savings. It may be appropriated by printing monopoly money, thereby destroying the purchasing power of existing money. Some would call it theft.
Skep41| 2.25.09 @ 10:48AM
So, jaw thrust out in typical socialist fashion like Fidel or Hugo, our 'slightly-left-of-center' Maximum Leader proposed government regulation of banker's salaries and policies that would amount to the quasi-nationalization of the banks, blamed the now effectively nationalized auto companies' problems on their feeble management and not on the predatory unions which have crippled The Big Three and now the taxpayers with endlessly increasing labor costs, declared his intention to nationalize health care and proclaimed his desire to invest trillions converting to the most expensive, unreliable energy sources in his Quixotic quest to bring the weather under the control of the State. A nice evening's work for our 'slightly-left-of-center' Caudillo. The markets are only down 150 points so far this morning but give them time to mull over the Stalinist nature of his proposals; stocks will soon be as worthless as the currency we have to buy them with. This is good. The Wall Street types who were so groovy and voted Green deserve to have every penny of their Capitalist loot striped from their pudgy fingers by these Marxist harpies. We can all smile in anticipation when we think of the Cuba-style health care we're about to receive. After all, didn't Michael Moore say it was so much better? Thank goodness we're getting 'slightly-left-of-center' policies, like Hugo or Fidel, instead of 'really-left-of-center' ones like Pol Pot or Kim Jong Il.
Mike M| 2.25.09 @ 10:57AM
Obama's stock seems headed the way of Air America.
JP| 2.25.09 @ 11:25AM
One could say, if anything, Obama and the Congressional Dems have been bold; of course, some would also say he's been reckless. In a period of one month his spending plan will equal in terms of dollars the defecit President Bush ran in 5 years. By the end of March, President Obama will have spent in 60 days an amount equal to 8 years of defecit spending under Bush.
By to what avail? In simple terms -a permanent growth in the size of the Federal goverment. Many of the programs, offices, bureaucracies now being put into place will remain long after President Obama and Speaker Pelosi are gone. Can anyone remember Carter's Dept of Education going anywhere after he left office? Obama is pushing the political "center" far to the Left. And with it, the GOP will follow.
I'd put my money on Obama. Even if he's a one term wonder, and the GOP recapture's Congress, does anyone really think the goverment will ever shrink? Will the GOP ever be savvy enough and determined enough to defeat the Dems at thier own game?
Dollar's dead Dubya killed it| 2.25.09 @ 11:47AM
Sell Sell Sell Sell, and get out before it's to late there will be no trees left. Soon people will turn up at the ATM and it will be out of service permenently. You will be able to walk in and help your self, because no one accept American dollars anymore.
Army Girl| 2.25.09 @ 11:49AM
Regardless, his supporters will forgive him and make excuses for him when his stock is rock botomo. AG
moron| 2.25.09 @ 3:53PM
Global Crossing comes to mind. Off the chart pe with no product other than CO2.
frost| 2.25.09 @ 4:37PM
This may be a departure from "the topic," per se, but, if you'll indulge me - - recent events had me reaching up on my bookshelf last night, right about the time Whats-his-face was getting ready to propagandize the public and his cheerleading minions in the media (of which I was one some years ago) - - stretched out and began reading "Atlas Shrugged" again.
Upon completion, I'll do "1984" again; I usually try for a re-read every 15 years or so.....
frost| 2.25.09 @ 4:39PM
uuuuuh, the media... not cheerleaders.....
Thom| 2.25.09 @ 6:23PM
frost, don't forget Brave New World....and Logan's Run.... For most Stock indexes there are reverses and for BHO, inc there is rising stock price in Lead and Brass futures.... these people are drunk with themselves....
Jim| 2.25.09 @ 7:15PM
REOMMENDATION: STRONG SELL
jack preston| 2.25.09 @ 8:10PM
Obama is making the mistakes CEO make whose stocks are shorted to zero.He has shown up twice promising details on bank plan and twice has had no details. What did we expect from a guy who never has had a real job or experience managing or leading people? He is clueless. Remember when Perot said electing Clinton was like putting the guy who managed the local 711 in as CEO of Walmart? Well Obama is like picking up someone from some homeless shelter of coffee shop to be CEO of WalMart. Can you imagine if a Republican had said America invented the auto,or the US had 57 states,or thought tire inflation might solve the world energy crisis? Or said he would hire no lobbyists and then proceeded to fill his cabinet with every lobbyist,tax cheat and scoundrel he could find? Or said he would be fiscally responsible the day after signing a trillion dollar pay back bill? I am really confused, I dont know if he is an imbecile or a pathological liar
Thom| 2.25.09 @ 8:29PM
"I dont know if he is an imbecile or a pathological liar" I don't think we are at the point where an imbecile could get elected President so that leaves......
DaveS| 2.25.09 @ 10:09PM
A stock, and it would be handled by merrill lynch.
Be Ready to die| 3.1.09 @ 4:35PM
Warren Buffet is losing money, and said America will be in a mess till 2010, 2010 is when world war 3 starts officially. Be ready to die, be ready for the draft.
hgjh| 11.25.09 @ 8:45PM
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