Michael Jordan was one of the greatest basketball players ever, partly because he knew where the ball was going. The recent State of the Union address delivered by President Obama gave everyday folks some insight on where the money will be flowing. Here is a breakdown of the address.
Energy: The word “energy” was used 17 times. With the recent developments in Egypt, it has brought to light again, our dependence on foreign countries to provide us with our energy needs. This has to change, and the President has made it clear this is a priority.
David Carter, chief investment officer of Lenox Advisors, suggested investors might want to approach investing in clean and alternative-energy companies as if they were venture capitalists. There is a lot of technology and business risk associated with the companies in this sector, he said. “You should invest in ETFs because many [companies] will fail and one or two will succeed and we don’t know which ones will work out,” he said.
Health Care: The word “health care” was used 6 times. “Emphasis on reducing health-care costs by improving electronic medical records benefits health care information technology companies” says Jeremy Zirin, Cheif Equity Strategist at UBS Wealth Management Research.
Investments: The word “investments” was used 4 times. Three out of those four times were used in the sense of public investments vs. private investments. This is also known as government spending. Given that the US deficit is roughly 90% of our total gross domestic product and we are still talking about raising the debt ceiling is a clear sign that the threat of inflation is still real.
How do you hedge against inflation? As I spoke about it in my previous blog “Wondering how to profit from excessive government spending?” posted June 30th, 2010, investing in hotels is a great way to hedge against inflation. Generally speaking, as inflation begins to rise, so do the price of hotel room rates. “Since 1967, the rate of increase in the industry’s average daily hotel rate has exceeded the change in the consumer price index except during two periods: 1973 to 1975 and 1988 to 1993,” according to Hotel & Motel Management.
Given that President Obama is an avid basketball player, we now know where the ball is going. The question now is whether we have a scoring opportunity or not.
Darren Nakos, CCIM
Resort Realty Capital, LLC
111 Main Street
Frisco, CO 80443-0630
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