President Obama "Evolves" to Love My Favorite Sector
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- Created on Wednesday, 16 May 2012 08:00
- Written by Andrew Snyder, Editorial Director, Inside Investing Daily
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Obama wants us to believe he's fighting the greed of the private equity sector. But the truth is something far different.
I want to repeat what I wrote yesterday:
There is so much you need to know about what takes place on Wall Street. The greed, the vanity, the coercion... it's disgusting.
I write it again because the same is true of Washington.
And it is exactly why Obama and I are in love with the same sector.
There's a common misconception amongst the herd. If you listen to the campaign ads and the puppets running the daily White House briefings, you'd think Obama hates the private equity sector.
It's not true.
He loves the industry... and its money.
On Monday night -- the same time Obama's "vulture capitalism" campaign was flooding American airwaves -- our president quietly crossed the well-polished threshold leading into Tony James' home in Manhattan.
James, in case you didn't know, is the boss at Blackstone Capital -- the baddest of the bad when it comes to private equity.
Obama didn't mind pinching his political nose and enduring the stench of hypocrisy for the night... not with scores of dinner guests (mostly Wall Street elite) paying $35,800 for the chance to rub shoulders with the campaigner-in-chief.
The hypocrisy doesn't stop with Obama, though. Far from it.
The idea that some of the biggest stars in the private equity world are the folks financing Obama's anti-business message would be laughable if it weren't so profitable.
From the outside it doesn't make sense. But from the inside... it's perfectly clear.
It is why the private equity sector is my No. 1 pick these days. Obama and his team of economic puppeteers have created the best moneymaking environment in generations.
Get this... on Monday (just a few hours before Obama crossed the ideological picket line), my latest issue of Unconventional Wealth went live on our website. It was great timing.
In the issue, I reveal the perfect way to take advantage of Washington's all-out economic manipulation.
Here's how I describe this unconventional play:
- Its shares are trading for just shy of 50% of their fair market value... meaning there's a very real shot at triple-digit gains over the next 12 months.
- The $11 stock comes with an 11% annual cash payout... the company just affirmed its 49th straight payment.
- The small company just announced its fifth straight quarter of double-digit growth.
Really, I could have given you the stats of virtually any company in the private equity game and they would have been just as stellar. That's because this administration -- whether it was on purpose or not -- has created the perfect environment for the sector.
The brouhaha with JPMorgan this week is a perfect example.
Thanks to the Fed's ultra-low rates for an ultra-long time, traditional banking is dead. If banks want to make anything close to a decent profit, they have to stray to the far ends of the risk spectrum.
It has left a huge void for the private equity sector to fill.
This is my favorite chart. It shows the profit opportunity.
The chart compares the yield on 10-year Treasuries to the revenue generated by the company I argue is perfectly poised to take advantage of what Washington has done to our economy.
The correlation is undeniable. The longer rates stay low, the higher the revenue will surge.
My point with all of this is simple. Actually, I've got two points.
First... all politicians lie and cheat. It's how they stay in business.
Second... take advantage of it. You are missing a grand opportunity if you don't.
The easiest way to do it is to follow the money. There is a very good reason private equity companies are funding Obama's attack ads.
They know another four years with him in the Oval Office spells another four years of economic manipulation... and big profits for the investors willing to take advantage of it.
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Chart of the Day: Hot Air and Gas
By Adam English, Associate Editor, Inside Investing Daily
It is a good thing politicians never listen to the Congressional Budget Office.
If they did, their sense of importance for the economy would be shattered and they'd have to rewrite all of their stump speeches.
The CBO just released some very interesting information about the effect of domestic oil production on national gasoline prices. In a nutshell, there is absolutely no relationship at all.
The chart shows that oil prices for a country that is entirely dependent on imports are highly correlated and proportionate to a large exporter. The real difference in price is entirely related to the taxes placed on gasoline.
The United States federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel. State and local taxes add an average of 31.1 cents to gasoline and 30.2 cents to diesel.
That brings the total influence politicians have on domestic gasoline prices to just under 50 cents per gallon. A lot of money could be saved if taxes were slashed, but taxpayers would cover the lost revenue one way or another.
The data proves cheap gas cannot exist in the U.S. without wild increases in supply or a large reduction of demand.
The global free market is in charge here and it isn't going to listen to any politician.
The next time you hear a candidate complain about high gas prices and promise to bring them down for you, just remember what they are really offering... a bunch of hot air about gas.
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