Which market sectors stand to benefit from which potential presidents?

Obviously this is a rather ambitious post, but I figured that I might as well get the ball rolling a little bit. First of all, here's the probabilities that each of the candidates have had of winning this election, via InTrade:


Perhaps the whole year graph is a bit superfluous, but it is helpful to remember that there is a lot of volatility in the election and although Obama has the top spot right now there is no guarantee that he will hold onto it. The probabilities as of the close on March 31, 2008 are:

p (Obama) = 47.4
p (McCain) = 39.7
p (Clinton) = 11.2

That's the easy part. Extrapolating each of these presidents and trying to predict how the market will react is much more difficult. One way might be looking at their economic advisers. Yahoo Finance has a write-up of each of these candidate's chief economic advisers and a has a quick blurb on each of their policies.

Although this is too quick of a summary to draw any sort of conclusions, McCain's adviser seems to emphasize limiting fiscal spending (although Bush's presidency nominally ran on the same platform, while our country's debt speaks for itself), Obama's adviser seems to be against some supply side economics, and Hillary's adviser seems focused on reducing the income gap and working through the effects of globalization on the labor market. Any thoughts?

Minutes 3/31/08

Attendance:
1) Drew Raz
2) Brian Kim
3) Joe Davis
4) Andy McKenzie
5) Stephen Donnelly
6) Adam Ben-Avi
7) Danny McBee

The major topic of discussion was the skeleton for the mock portfolio, and the steps necessary to finish this project. We thought that of the six sectors, consumer-generalist, industrial, and biotech should receive a greater percentage of funds than real estate, media/telecom and fixed income.

We also split into sub-groups for the process of choosing investment vehicles for the mock portfolio. If you were not in attendance but expressed interest in a particular subgroup at our meeting before break, you will be meeting with that group. Assignments so far are as follows:

Real Estate: Danny M + Robert
Consumer/Generalist: Georg, Sean, Garrett
Fixed Income: Steve
Biotech: Drew, Joe, Andy
Media/Telecom: Brian, Arjun, Adam
Industrials: Dan Tan

There are still two spots open in industrials, and one in fixed income. If you are not on the list, email me by WEDNESDAY with your choice of sector, and I will put you on the list; first come, first served. If you weren't at the meeting, and absolutely hate where you've been placed, email me and we'll try to work something out. It will then be up to the subgroup chair to decide how exactly they want to divide up responsibilites. By next Monday, I think you should come in with a greater understanding of your industry and track the market leaders and current events.

By the end of the month, we'd like to bring in a speaker to help us firm up our knowledge with respect to allocation and selection, so it's important we've learned as much as we can before then. We also will consider buying research reports at that time.

I still get emails from the Middlebury Investment Club, and I found this in my inbox today, so if you're interested in oil, check this out. Have a good week, and get back to me if you're not in a subgroup.

More from Berkshire Hathaway

Following up on the recent post linking to Warren Buffet's annual report, here is a blog post summarizing some points made by Charlie Munger, his long-time partner and Vice President of Berkshire Hathaway. You can find the post by clicking here. It written by Mark Andreessen, a very well known entrepreneur from Silicon Valley, who, among other projects, co-founded Netscape.

This post analyzes some of the basic biases and tendencies of humans and applies them to the business world. Although it is primarily directed at entrepreneurs, it also talks about risk management and some other behavioral economics stuff.

I highly recommend the piece, it's been saved to the bookmark site del.icio.us over 300 times. You usually have to pay for writing like this.

Minutes 3/24/08

Attendance:
1) Georg Machinist
2) Stephen Donnelly
3) Brian Kim
4) Daniel Tan
5) Joe Davis
6) Andy McKenzie
7) Robert Babbage
8) Daniel McBee

Portfolio Structure and Contents:
1) 70% Equities (70% blue chip, 30% small and mid cap)
2) 15% Fixed Income
3) 15% Indices

Possible Investment Ideas-Equities:
Consumer: Buying basics, discount clubs
Biotech: Buying blue chips
Tech: Google?
Shorting luxury stocks (jewelrs, cruiselines, etc.)-if allowable

We discussed the state of the financial sector, and we generally think that the losses aren't over, and this would be a good area to avoid equities, and instead looked at a double-short financial indice, SKF

The group discussed the possible effects of the upcoming election on various sectors, and decided to see if anyone was interested in researching the 3 remaining candidates' stances with respect to the major sectors, as well as looking at the historical charts from past elections.


Our next task is to compile a list of possible equities, indices, fixed income instruments to research. E-mail your ideas to me with a name, ticker symbol if applicable, and a couple lines about why you think it's a good idea. I'll put together a list and send it back around, and we can work from there. In about three weeks, everyone should have picked a stock, put together a report, and be ready to deliver it.

Our next meeting will be next Monday, March 31st at 8PM.

Good reading material

Berkshire Hathaway released its widely read annual report recently.  It is written by Warren Buffett, one of the greatest investors ever, and is very helpful for both beginning investors and experts.

http://www.berkshirehathaway.com/letters/2007ltr.pdf

Test post

Hey guys, this is the first post on the beta version of our investment club blog. Feel free to try your own test posts. If you have any problems, e-mail Chris at chnieminski(at)vassar(dot)edu or myself at amckenz(at)gmail(dot)com.

Everybody else, thanks for visiting! This site will recieve more updates shortly. Potential topics include investment strategies, macro policy theory, and general news about the club. Please check back soon.

Minutes 3/3/08

Attendence:
1.Georg Machinist
2.Andrew Raz
3.Danny Mcbee
4. Arjun Agarwala
5.Bryan Kim
6.Josh Miller
7.Stephan Donnelly
8.Adam Ben-Avi
9.Garret King
10.Andy McKenzie
11.Joey Davis
12.Patrick Riggs (absent)
13.Sean Murray
14.Dan Tan (absent-proxy)
15.Chris Nieminski
16. Robert Babbage (absent-proxy)
17. Kartik Naram (absent-proxy)


Board Member Appointments:

Sec/Treasurer-Danny McBee over Joey Davis (vote of 7-5)
Consumer Generalist-Georg Machinist (vote 12-0)
Fixed Income- Steve Donnelly (vote 12-0)
Biotech/Healthcare-Drew Raz (vote 12-0)
Media/Telecomm-Brian Kim (vote 12-0)
Industrials-Dan Tan (vote 12-0)
Real Estate-Robert Babbage (vote 12-0)

*It was decided that at least 4 board members will have to vote in favor of a proposal for it to pass.


Stated Sector Interests:

Consumer Generalist-Georg Machinist, Sean Murray, Garrett King
Fixed Income- Steve Donnelly
Biotech/Healthcare-Drew Raz, Andy McKenzie
Media/Telecomm-Brian Kim, Joey Davis, Arjun Agarwala
Industrials-Dan Tan
Real Estate-Robert Babbage

*We should try to have at least 2 people in each sector to start with. Remember, you are always allowed to try out/switch sectors.


Future Plans:

Everyone needs to do extensive research on their sector(s) of interest over break. Look at market leaders and factors that allow certain companies to flourish, especially during volatile markets. Georg volunteered to create the research template before our next meeting. Chris will work on building the blog website and recruiting individuals who are interested in participating in it. Additionally, everyone should try to recruit new members. Georg and Drew will look into purchasing office supplies (ie a file cabinet) and research tools. Finally, the board will try to establish a meeting in the near future to meet with Cappy.


Future Meetings:

It was established that we will have general body meetings every Monday at 8pm in Rocky (currently room 308 but this is subject to change).