How do you spell Democrat? I-n-f-l-a-t-i-o-n

Filed under: Chesapeake Energy (CHK), Presidential elections, Oil, Stocks to Buy

I've been following the election closely for two years. For the most part, politics is a hobby of mine, but in this year's election my interest went much deeper.

I recognized very early that the 2008 vote would be monumental on so many levels and investment opportunities would abound. I even outlined the impact of the policies of each candidate on the market in an election gallery.

Now that the results are in with the Democrats taking significant control of the executive and legislative branches, I want to drill down and explore one investment idea that I believe will ascend above all the rest.

One common theme with all Democrats is that spending is sure to increase. Democrats are firmly in the Keynesian camp of using government spending to solve economic problems. We will see large government expenditures in the short term from the new administration.

Can anyone say "inflation"?

So much of the market is focused on deflation with current valuations based on the expectation of deflating prices. While it's true that the economy is slowing, I am more concerned about inflation.

Now, with a Democrat in the White House, I am convinced that the way to make money in the market is to bet on inflation. Vast sums of dollars will be printed and distributed into the economy to stabilize it. Doing so will weaken the U.S. dollar, increase interest rates and create inflationary conditions.

Front and center with inflation will be two commodity trades: gold and oil. I am not a believer in gold, so I'll stick to the oil trade. If you want to make money in the early stages of the new administration, I suggest you position your portfolio to profit from higher oil prices. That means owning oil stocks, and there are several names to consider:

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How do you spell Democrat? I-n-f-l-a-t-i-o-n originally appeared on BloggingStocks on Tue, 11 Nov 2008 17:00:00 EST. Please see our terms for use of feeds.

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