Taking Stock
For 2008, It's a Bull Market
The hype and analysis surrounding presidential candidates' quarterly fundraising reports already exceeds the level of scrutiny applied to IBM's latest quarterly earnings. And you can already invest in candidates through political betting sites. So why not take the comparison to its logical conclusion and start treating the candidates like actual corporations?
Here's a handy guide for political investors, indicating which prominent stocks the top presidential candidates most closely resemble.
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First, the Democrats:
Hillary Rodham Clinton: General Electric. Like GE, HRC is a blue-chip, a juggernaut of the 1990s that, while still a market leader, doesn't enjoy the cachet it once did. GE and HRC are both coasting on the reputation of an iconic, charismatic 1990s-era leader who stepped away from the national scene in 2001 to write a bestselling memoir. Like GE, HRC enjoys high brand-name recognition and sponsorship among blue-chip Wall Street firms but lacks real retail presence. Wants to use resources to take on global big needs. Despite impressive growth in recent years, stock hasn't been rewarded in the marketplace. In the national market of public opinion, both GE and HRC stand about where they stood five years ago. Recommendation: Hold.
Barack Obama: Google. Both have posted astonishing growth since splashy initial public offerings in 2004, and both have become darlings of Silicon Valley. Networked and populist, Google and Obama have benefited greatly from content generated by others: millions of newspaper articles and blog entries for Google and that hot viral "1984" ad for Obama. Both have rung up impressive sales figures based on small transactions and enjoy incredible momentum and popularity despite short operating histories. Both favor vague, feel-good mission statements: "Don't be evil," "Let us finish the work that needs to be done and usher in a new birth of freedom on this Earth." Recommendation: Strong buy.
John Edwards: Krispy Kreme Donuts. North Carolina-based franchises with Southern charm and sweet demeanor; busted out onto the national stage in the late 1990s. Both phenomena peaked in 2004 and have since struggled to connect with customers. Sympathetic and compelling back-story hasn't been matched by performance; insufficient attention to updating brand message for changed environment. Lack of international presence a problem. These days, Krispy Kreme loses out to urbanized, better-heeled juggernauts like Starbucks and Dunkin' Donuts; Edwards loses out to urbanized, better-heeled chains like Clinton and Obama. Recommendation: Sell.
Quick pick -- Bill Richardson: Univision. Upstart with power base in southwestern United States trying to capitalize on growing national importance of Hispanic consumers.
Now, the Republicans:
Rudolph W. Giuliani: Halliburton. Both enterprises attempt to merge public service and private profits. Both were struggling in the late 1990s: Halliburton from torpor in the energy patch, Giuliani from torpor in his second term as mayor of New York. Events triggered by Sept. 11, 2001, led to swift rise in prominence and profitability. Both have shown brilliant ability to profit from political connections: Giuliani with a range of consulting contracts, Halliburton with no-bid contracts won by its KBR subsidiary. Despite being dogged by accusations of incompetence and corruption among staffers in Iraq (Bernard Kerik and KBR, respectively), stocks have risen sharply. Giuliani went through messy public divorce from problematic partner Donna Hanover Giuliani; Halliburton went through a messy public divorce from problematic KBR unit. Recommendation: Buy.
John McCain: General Motors. Two old warhorses that have solid reputations as patriotic brands but are struggling to hold on to shrinking market share. Strategy of relying on large, gas-guzzling vehicles (SUVs for GM, the Straight Talk Express for McCain) no longer resonates as it did in 2000 because of changing political conditions in the Middle East. GM is hampered by burdensome legacy costs that it willingly assumed: pension and health-care promises to unions. McCain is hampered by burdensome legacy cost that he willingly assumed: four-square support of the Iraq war. Stubborn resistance to switching strategy or adapting to market conditions by developing new products is hurting both stocks. Recommendation: Sell.
Mitt Romney: Citigroup. These blue-chip financial institutions try to intimidate rivals with massive balance sheets but are having difficulty finding traction in the marketplace. Both are uncomfortable with their recent history: regulatory problems and research scandals for Citigroup, a history of moderate Republicanism in Massachusetts for Romney. Transparently lame rebranding efforts: Citigroup has become Citi; Romney has become a gun nut and an abortion foe. Despite employing brilliant financial/economic minds (Robert Rubin at Citigroup, Gregory Mankiw and Glenn Hubbard for Romney), these two stocks are treading water. Recommendation: Hold.
Quick pick -- Tommy Thompson: Zions Bancorporation. Both emphasize connection between Jews and sound money management. Zions does so with its name; Thompson does so with appalling, borderline anti-Semitic remarks.
Daniel Gross writes the Moneybox column for Slate.
