Iowa 2012 - Presidential Elections and Global Investor Confidence

With the 2012 elections coming, the political primaries are already in full swing. In the past, Iowa has been the starting point of the US presidential primary process. Last time it was Obama, McCain with, Huckabee and Romney in the mix, but in 2012, anything can happen.

Will the smart money stay on the sidelines for 2012? The recent election fiascos such as Gore V. Bush have caused much market uncertainty and caution. What candidate will allow the US economy to move ahead? Will the election cause President Obama to change his policy or course? When President Clinton ran for office in 1996, he had moved toward the center, established himself as a centrist on fiscal issues, and began working with Speaker Gingrich and all concerned parties to make the country more efficient. Did everyone get what they wanted? No, but it was a situation where the global investing community saw several things: leadership, fiscal restraint, and the government working for the people and business.

The tax situation is also in flux. With 90% of global customers being outside of the US, the smart money is going global every day. The other problem is that companies are forced to invest offshore to maximize opportunities to sell to the global customer and increase sales. The international revenues are often times reinvested offshore and not brought back to the USA.

How do you win in the financial game of life? Gold is high, real estate is low, stock markets are flat, and economic cycles ebb and flow every 5-7 years. Cash is floating around and people are buying up assets on the cheap. Many people are buying US and global stocks that are undervalued too and that includes investors from the EU and Asia. With the average investor having the same amount as they had in their 401K as they did 10 years ago, the average American investor is hungry for change, innovation, and better business performance. American investors have been forced to put money in emerging markets, India, China, Latin America. Why, because that is where the growth and demographics are creating profits. As for domestic investing, dividend stocks are hot again because the CD rates are so low and many dividend stocks are trading at liquidation value or very low PE ratios. But if the tax laws change on dividends, then people might bail on these investments which could crush many stocks again in sectors such as the banks and financials.

Now, how does this relate to the election? It is a policy and confidence issue. Each country that has political leadership are analyzed like a NFL football team to see how they will operate. The smart investors will focus on investing in countries which are business friendly. Without profits, there are no investors, no jobs, no innovation, and no taxes paid to the community. Don’t forget, a big percentage of US stocks are owned by offshore funds, ETFs, hedge funds and investors. Thus, America needs global investors and needs their confidence.

Overall, the global investors are looking for signs and analyzing the tea leaves to see which direction this country is going. If the USA gets a grip on waste, taxation, corruption, and red tape; again, the global investors will see value and growth potential in the USA.

Whatever happens in this political debate, it is time for bold innovative economic leadership that has a laser focus on the customer, and the customer is none other than the “American Company and American Working Taxpayer”.