Taking Stock : Post Election – Obama Advantage Trades

The last time Obama won the elections in 2008, the Dow slid 486 points. Yesterday, after the results, the Dow dropped 369 points before closing at 313 points down.

Source : WSJ

Should we logically assume that the selling can be equated with negative sentiments ?

An election is a happy affair with a person elected by popular vote democratically to run a country. Surely when the majority has voted for a person, it would be a good thing ? Now everyone who owns stocks are poorer because of Obama which means OBAMA = MAKE US POOR.

Unless, of course, the majority of the majority voters are those with incomes under USD30,000 a year and the youth who are unemployed.

Thus, I can suppose we are living in the “mourning” period now which is the best opportunity for us to take stock of the situation and lay down the Obama-advantage trades for the next 4 years.

It is a painful process for me. I confess that my portfolio is denominated in USD, AUD and HKD ! Damn Obama !

My reasoning was that my house is the largest SGD denominated asset I own and I will not risking any more SGD in this tin pot economy….. until I read this.
“On the other hand, the reaffirmation of QE policy should clearly benefit the Singapore dollar. We predict USDSGD levels of 1.19 in 12 months.” – UBS.

Darn Obama again ! This tin pot economy is starting to look darn good for all the tin that it is made of.

It is true. Singapore has little to offer tangibly to any investor. It’s has plenty of  intangible value. Safe haven for money, no questions asked, AAA rating, a promise to appreciate every single SGD dollar you buy …..

So now, the uphill task of re-allocating the portfolio.

What do I have now for short term investments ?

Some short S&P 500 ETFs (SDS US +8.5% ), some crude oil ETF (DIG US -4% from last week), Gold (XAU/USD +7.5%), some AUD/USD and Silver double barrier knock out options giving me 3% a month. Sold my last perpetual bond 2 weeks ago and that was a long term investment.

Now I am frightened.

What I have been proclaiming since Obama’s victory has been ” You Cannot Preserve Your Wealth Anymore ! You have to DOUBLE It or Face the Prospect of Future Impoverishment !”

It struck me hard when I was articulating the concept of QE3 to my 11 year old son the other day. I said, “If Mommy gives you 20 bucks today and you can buy 40 Coca Colas or if Mommy gives you 100 bucks today but you can only buy 10 Coca Colas, which option would you take ?” He said the 100 bucks was more important. I had to CAN THE COKE idea and change it to XBox games before he realised his purchasing power was diminished.

By now, the world should have half woken to the idea of money printing in QE and that it is not a panacea for economic ills for it cannot force consumption especially when the QE is concentrated in the hands of a few ! Not only is it not a panacea, it has become a lodestone around our necks in a Catch 22 situation that we cannot undo it without collateral damage. [Maybe that is why Bernanke is going to conveniently “retire” next Jan]

Obama Style Is Singapore Style. Make people feel richer by making them poorer and this formula is now loaded into every successful politician’s game plan to create a new form of modern servitude to the ends of personal wealth preservation. Surely, like my 11 y.o. son, you would not want to lose your 100 bucks now that you got it, even if it only gives you 10 Coca Colas.

Since the days of 20 bucks for 40 Cokes are never coming back. I need to gun for double because next year, the 10 cokes could be reduced to 8. I have to re-condition my head to thinking that those days won’t be back.

So allocating the portfolio to the following ETFs.

1. 2823 HK  IShares FSTE A50 China Index  HKD 9.75 Target 11.00 end Dec
2. AIGI LN  ETFS Industrial Metals Dow Jones-UBS Industrial Metals Total Return Index USD 14.64 Target 16.00 approx
3. AIGA LN  ETFS Agriculture Dow Jones-UBS Agricultural Total Return Index USD 8.50 level Target 10.00 approx
4. DIG US Proshares Ultra Oil & Gas USD 43.30-50 level Target 51.00 (yes I know there is plenty of supply right now but the situation could change anytime)

GOLD and SILVER of course as well. All playing off the USD weakness in the months to come, courtesy of the Obama team.

Not particularly enthused about Singapore and SE Asia for that matter because the market are overdone with the amount of hot money inflows. That is why I choose down beatened China this time. And no thank you to bonds or any kind because I am not looking to pauper myself with your measly returns.

I stress, this is for the short term 1-3 months and does not represent any long term views of mine.