Investing in the friends of Presidents...

[Belok]

I know I'm not as informed about investing as most of the people who participate on this forum - but this seems like a topic of importance, and I'd like to see if you more experienced investors have any input...

Basically, my question is - Wouldn't it be a no-brainer to invest heavily in companies who are run by friends of the current/upcoming president? Or any well-run businesses that involve the Presidents' field of expertise?

I know it's easy to use hindsight and say "Bush wanted to be an oil tycoon, we all should have invested in oil companies the second he was elected!" - This is why i'd like the opinions of some of you veteran investors. I am not old enough to have known about Clintons business relationships before his presidency - or if their profits increased after he was elected.

But from a novices perspective, it seems extremely obvious that a President will make favorable laws + government contracts to his friends and other experts in that field.

For example...if Giuliani were elected in 08, should we expect business as usual(massive growth) in the oil industry?

Can this be historically proven?

Ty for your input.

[stephenNUTS]

Well I guess everyone that invested in President-elect George W.Bush's close friend Ken Lay...that guy who just happened to be CEO of Enron ..... must feel pretty dumb,as well as broke right now based on that theory.

In fact Giuliani's BUDDY....former NYC police boss Bernie Kerrick just might cost him the republican presidential nomination due to the negative press surrounding his recent indictment....and he was also on the board of stun gun maker TASER Corp

If anything...politicians have to be EXTREMELY careful of associations/friends like this...and so should investors

SF [img]/images/graemlins/cool.gif[/img]

[Ray Zee]

good thinking. but friends of the president isnt a no brainer but look for things he will likely do and be able to get passed. thats the clue here. then make your bets.
that said after the start of war talk i bought alot of haliburton and sold it when its problems surfaced. i also bought oil companies and companies that might benefit from a weaker dollar.
i wish though that he had liked apple computers.

[Foghatlive]

The problem with this idea, and others like is that specialists can exploit it.

To use Ray's example of Haliburton, Specialists were able to exploit the demand, sell short at the top, drive the price down, cover their shorts, accumulate more stock as people sold at the bottom, and, finally,create more demand by raising the price (on light volume) to once again sell and sell short at the top. Notice how Haliburton was able to recover quite nicely, despite the "Problems" in Iraq.

btw, Ray,

Thanks for the tip on the Panasonic digital camera. It's fantastic.