Market Overview

How to Profit From Gingrich Call For Social Security Opt Out


Financial sector stocks could be given a boost if Republican presidential contender Newt Gingrich gets his way.

The former House speaker, who has been rising in the polls, says that he wants to allow Americans to opt out of the Social Security system and place funds into personally managed retirement accounts at private institutions. The idea isn't new but it should get more attention if Gingrich continues to move up in the polls.

When Gingrich entered the race for the Republican presidential nomination he was considered a long shot, but Republican voters continue to look for an alternative to former Massachusetts governor Mitt Romney. Recent polls show Newt Gingrich closing in on Romney, who many have considered the inevitable Republican candidate for President of the United States. The only problem is that Romney is considered by many Republicans to be a flip flopper and not conservative enough.

Gingrich's call to allow Americans to opt out of the Social Security system could cause his stock to rise and position him as a "true conservative" in contrast with Mitt Romney - who criticized fellow Republican presidential contender Rick Perry for calling the Social Security system a "Ponzi scheme".

If Newt Gingrich's poll numbers continue to rise, investors should take a closer look at stocks like Charles Schwab (NYSE: SCHW) and Morningstar (Nasdaq: MORN) or the ProShares Ultra Financials (NYSE: UYG) ETF. If Gingrich manages to win the Republican presidential nomination, the idea of moving away from the Social Security system will be up for debate. Just the possibility of hundreds of billions of dollars flowing into private retirement accounts could push many stocks in the financial sector higher.

If Gingrich manages to win the Republican presidential nomination but loses the general election, the Direxion Financial Bear 3X Shares (NYSE: FAZ) could see its share price surge higher as speculators pull out of financial stocks.


Related Articles (FAZ + MORN)

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