Profits Now? Yes You Can

The current political situation makes it difficult to find investments.

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Aaron Katsman , | updated: 1:48 AM

Lots of Money
Lots of Money

For citizens of Israel, there is near unanimity that, to date, President Obama has been a less than stellar president. His approach to foreign policy, based on capitulation to enemies of freedom and an almost disdain for allies of the US, has left Israel far less secure than when he assumed office. For those who live in the US, not only is the country less safe, but the economy is nothing to write home about. Soaring deficits, very high unemployment, sweeping new regulation stifling business and a general lack of confidence are just a few of the reasons investors are souring on investing in the US.

While all this may be true, it doesn’t mean that investors can’t take advantage of this situation. Here are 2 ways investors can take advantage of the current political situation and potentially profit:

US Treasury Bubble?

With US interest rates at record low levels and the government continuing to print money like it’s going out of style, many experts believe that there is a bubble in the US Government bond market, and as happens with most bubbles, it is due for a pop.

According to Tom Lydon from ETFTrends.com, “As the U.S. government increases spending, the government will have to borrow by issuing Treasuries with maturities ranging from 1 to 30 years. Treasuries are now declining about 20% from previous highs, and yields are over 4%. If buyers of Treasuries don’t want any more debt, then the government will have to entice them with higher yields, or lowering Treasury prices.”

Lydon continues, “There are also talks of the U.S.’s AAA credit rating being downgraded. If this were to happen then investors would demand higher yields for the riskier debt, which would push Treasury prices down. When the U.S. government eventually raises interest rates, Treasury prices will fall and yields will rise.”

For investors who want to take advantage of this potential opportunity, there are Exchange Traded Funds (ETFs) that the public may end up with a road that goes nowhere short the US Treasury market. What this basically means is that if interest rates move higher, investors who are short this market may profit.

Infrastructure


The public may end up with a road that goes nowhere.
President Obama has made it a priority to invest in infrastructure projects. In his recent State of the Union Address he said, "We are making the largest investment in infrastructure since the interstate highway system was created."  He has allocated billions and billions of dollars for roads, bridges, trains and other infrastructure upgrades.  While the public may end up with a road that goes nowhere, many companies that either build or provide the supplies for large infrastructure projects stand to benefit immensely.  Investors should look at either individual stocks or funds that have exposure to this sector, if they want to potentially capitalize on this presidential priority.

Speak with your financial advisor to investigate whether these investments are appropriate for your specific investment portfolio.  

 (Aaron Katsman is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. a registered broker dealer, Member FINRA, SIPC, MSRB, NFA, SIFMA. For more information www.aaronkatsman.com,  call (02) 624-0995 or email aaron@lighthousecapital.co.il. ) 



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