| It’s a New Day! Good Morning George, Putting politics aside, the new presidential administration signals changes for investors. Whether we like them or not, we must deal with reality. Some of these have been anticipated and trends are already underway. However, the reality of the change will add momentum and reveal new opportunities and risks. Here are some of what we expect: Big-cap technology companies will not be broken up. More regulation, undoubtedly, but not to the extent that business models are threatened. Blue collar industries and companies will be favored. Infrastructure spending and other incentives will target these. They will also be aided in dealing with international competition. Financial firms, especially banks, will operate in a more helpful interest rate environment. In short, interest rates will gradually work higher helping their net interest rate margins. Many consumer sectors will return to health as the pandemic is quelled. These will find many new customers as minimum wage increases and other programs are implemented to aid those workers at the bottom of the income scale. Healthcare enterprises are in the middle. Some may get additional patients as broader insurance or universal healthcare schemes are put in place. However, there is likely to be a body of price controls put into place through a variety of avenues. Medicare and Medicaid will become much more aggressive in establishing prices for drugs and services. These will affect all other providers too. Special tax treatment for certain sectors will be targeted. To support increased spending, alleged loopholes will become under scrutiny and removed, where possible. Corporate tax levels will be increased too. Oil and other fossil fuel providers will no longer be engines of wealth creation. Environmental concerns will cap upside opportunity here. There may be plenty more of these to emerge. More opportunities in some cases and more risks in others. It is always the job of the Bull and his partners to ferret these out and have appropriate responses. The objective is always to find the right mix of investments to continue to grow your stakes; stay steady my friends. Sincerely, Scott C. Wohlers |
