Pitchforks and Torches

Written By Brian Hicks

Posted September 18, 2010

Welcome to the Wealth Daily Weekend Edition — our insights from the week in investing and links to our most-read Wealth Daily and sister publication articles.

Grab your bullhorn and climb to the top of the barricade the 2010 mid-term elections are shaping up to be a doozy.

With the guillotines at the ready, a large slice of the voters are mad as hell, and they’re not going to take it anymore.

All of which sends my libertarian heart aflutter, as the establishment shakes in its muddy boots.

And while there is no monolithic figure like Louis XVI to topple this time, it’s clear now that come Nov. 2nd, heads will roll.

Just ask Mike Castle or Bob Bennett. They’ll tell you it’s “a sign of the times.”

But that is what happens when you shake the bourgeois from their complacent slumber. Suddenly, the Third Estate decides to storm the Bastille.

It’s as if they have re-discovered the document that famously begins: “When in the course of human events…”

Or have taken the time to re-read this passage from over 20 years ago. In his farewell address, then-President Reagan wrote:

Ours was the first revolution in the history of mankind that truly reversed the course of government, and with three little words: “We the people.” We the people tell the government what to do, it doesn’t tell us. “We the people” are the driver, the government is the car. And we decide where it should go, and by what route, and how fast. Almost all the world’s constitutions are documents in which governments tell the people what their privileges are. Our Constitution is a document in which “We the people” tell the government what it is allowed to do. “We the people” are free.

And in the worst economic crisis of their lifetime, who can blame them?

After all, it’s been quite a bumpy ride from euphoria to sadness over the last four years…


Of course, how all of this anger plays out in the markets is all part of the greater guessing game…

But if history is any guide, the market may be in store for a bullish upswing.

According to data compiled by investment firm Birinyi Associates, in midterm elections dating to 1962, the S&P 500 has risen an average of 2.35 percent two months prior to the election, and added gains of 7.46 percent in the three months that followed.

That’s roughly a 10% gain overall, which would make for a target of 1199 on the S&P by February 2011 based on the September 2nd close.

That’s nearly all the way back to April highs — and likely within a whisper of the 200-day moving average.


As for places to play this prospective trend, my pal Ian Cooper made the case for how to trade the November 2010 elections in a story last Friday.

If the party in power loses the Congress, Ian says, oil and nuclear power companies should benefit.

Additionally, he likes health care companies including Unitedhealth Group (NYSE: UNH), Humana Inc. (NYSE:HUM), and Pfizer (PFE), with a turnover in leadership.

As for me, I’ve decided to go long pitchforks and torches headed into this one… It beats apples and cardboard boxes to sell them in.

As for some other places to invest your hard-earned labor, here are a few of the best investment ideas from the pages of this week’s top-read Wealth Daily and Energy & Capital articles.

Have a great weekend.

Your bargain-hunting analyst,

steve sig

Steve Christ
Editor, Wealth Daily

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