Obama or Romney: Who’s Best for Investors and the Economy?

by InvestorPlace Staff | October 2, 2012 12:26 pm

[1]America has roughly a month and change before the presidential election, and one thing’s for certain: Whoever is elected will save America.

Or ruin it.

Pretty much depends on whose side you’re on.

While there’s a litany of big-ticket issues outside of your wallet to consider, make no bones about it — the economy is the highlight of this election, be it on the spending front, the jobs front, the business front or the investing front.

And while there are plenty of outside factors pressing on each of these issues, how those fronts shake out will largely be affected by who’s sitting in the Oval Office come 2013. To get some idea of who might put the U.S. economy — and investors — in a better place, two of our InvestorPlace experts sound off on each side of the coin: Do you want Mitt Romney, or Barack Obama?

First, a look at the challenger:

Mitt Romney

With regards to improving the economy, there are plenty of reasons why Mitt Romney deserves your vote.

First, look at Barack Obama’s track record. Obama and the Democratic-controlled Congress passed the American Recovery and Reinvestment Act in February 2009. The legislation was rushed through Congress at a cost of more than $800 billion. The idea was that all this money would create jobs by investing in various infrastructure projects and giving money to the states to allocate to create jobs. It didn’t work because the money was not actually spent on creating jobs. Much of it was handed to the states with no oversight or accountability. If you visit this website[2], you can see how painfully wasteful this plan was.

We were repeatedly told that 7 million jobs would be created[3]. Instead, there has been a net loss of 86,000 jobs. The real unemployment number is 14.9%[4]. That translates to 22 million Americans out of work.

This alone proves Obama’s economic policies have failed and failure is no reason to re-elect a president. But let’s keep going.

America is a business in need of a turnaround artist. There’s been a lot of noise in the media about Bain Capital, but the non-partisan research[5] proves Mitt Romney has a solid record. You’ll note that Mitt Romney does not propose to spend hundreds of billions of dollars on wasteful projects that create no jobs. In fact, he says[6] he’ll aim to curtail spending. Romney and Ryan have repeatedly stated that they will get government out of the way, and let people build their businesses.

In a June survey of businesses, 54% weren’t hiring either because they are “concerned about the economy in general” or from “lingering anxiety from the recession.” In other words, businesses are suffering from uncertainty, and they are in two specific areas that Mitt Romney will address:

Mitt Romney wants to repeal Obamacare, which would remove uncertainty, which means businesses will be more likely to hire workers.

 Right now, businesses aren’t sure how much Obamacare is going to cost them — because nobody really understands the law.

With regard to regulatory uncertainty, Mitt Romney says on his website[9] that he will “initiate review and elimination of all Obama-era regulations that unduly burden the economy.” I’ve written before that some $2 trillion of capital is on strike. It sits on the sidelines because investment managers, who only get paid when they actually make money, are too afraid to invest in businesses that might get regulated out of business.

Do you want another four years of a president whose policies have created, and will continue to create, uncertainty for businesses — which will make them reluctant to hire more workers?

Or do you want a proven businessman whose policies will remove uncertainty for businesses, and allow their capital to flow again, to hire more workers?

— Lawrence Meyers

Now, to the president …

Barack Obama

Well, if you’re one of the 47% Romney believes are freeloaders[10], the answer’s self-evident. For the remaining 52% of the voting population — the wealthiest 1% will vote for the former Massachusetts governor — it’s a vexing question for sure.

As a Canadian, my editors thought I’d have a unique approach in defending the Obama/Democratic approach to resurrecting the economy. Once a huge supporter of Ronald Reagan, I’ve grown fond of the Democratic party’s approach to leadership. Barack Obama has put the country on sounder footing since his election in November 2008. A second term is vital to America’s future.

I write about investments for a living. I’m as cynical as they come about CEOs and leadership. And I wasn’t at all convinced Obama was the real deal. Four years later, I’ve seen him tackle issues that his predecessor wouldn’t touch with a 10-foot pole.

Health care in America is a complete and utter mess (Canada’s not much better). Wading into an issue that most strategists would suggest is at best a political hot potato and at worst a career killer, the president has made an impassioned plea to make health care coverage available for all Americans, including the 47% that Mitt Romney so casually dismisses. It was a gutsy move that shows he’s more than capable of making difficult decisions that affect 100% of the American people. If I could vote, he’d get mine, which I wouldn’t have said four years ago.

If you invested $10,000 in the SPDR S&P 500 ETF (NYSE:SPY[11]) on Jan. 20, 2009 — the date of Obama’s inauguration — you would have $16,100 as of Sept. 28 of this year. That’s an annualized return of 19.52%. In the first 44 months of Bill Clinton’s first term as president, a $10,000 investment in the SPY (inception was two days after 1993 inauguration) generated an annualized return of 12.95% — 657 basis points less.

Fidelity studied 48 years of elections and found that the average annual return under a Democrat president was 12% compared to 4% for the Republicans. Further, an incumbent victory tends to result in a 10% boost to stock prices compared to a slight decline when the incumbent loses.

If you’re an investor, a Barack Obama victory is clearly the better scenario.

The Republicans suggest President Obama has been woeful in the creation of new jobs since taking office. But according to revised labor numbers, Obama actually has created a net gain of 125,000 private-sector jobs in his 44 months in office. At the Democratic convention, Bill Clinton reminded us that since 1961, the Democrats have created 42 million private-sector jobs compared to 24 million for the Republicans. In terms of presidents, no one has done a better job than Clinton himself, who created almost 21 million in his two terms in office.

The worst offender on that list: George W. Bush, with a loss of 646,000 jobs over eight years.

While Americans are rightfully impatient with the progress, private-sector job growth has continued for 30 straight months, and the numbers would have been even better if the Republicans had passed Obama’s job plan.

The U.S. is Canada’s largest trading partner by a country mile, so what happens in November means a great deal to the Canadian economy. It’s for this reason that Canadians like me tend to view this subject with the utmost consideration. If I thought it made sense to switch horses mid-stride, I’d have no problem supporting a Republican candidate. In my opinion, however, Americans are wise to go with the one they took to the dance.

Ultimately, Obama will be better than Romney for both investors and the economy.

— Will Ashworth

The opinions contained in this column are solely those of the writers.

Want to share your own views on money, politics and the 2012 elections? Drop us a line at letters@investorplace.com and we might reprint your views in our InvestorPolitics blog! Please include your name, city and state of residence. All letters submitted to this address will be considered for publication.

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  2. this website: http://stimuluswatch.org/2.0/
  3. that 7 million jobs would be created: http://www.buzzfeed.com/andrewkaczynski/7-times-in-2008-obama-promised-to-create-7-million
  4. The real unemployment number is 14.9%: http://www.cnbc.com/id/48468748/Real_Unemployment_Rate_Shows_Far_More_Jobless
  5. the non-partisan research: http://online.wsj.com/article/SB10001424052970204331304577140850713493694.html
  6. he says: http://www.mittromney.com/issues/spending
  7. how Obamacare will affect their costs: http://www.cnbc.com/id/47994895/What_Businesses_Didn_t_Get_From_the_Health_Care_Ruling
  8. making them afraid to put money to work: https://www.investorplace.com/investorpolitics/a-romney-win-ends-the-capital-strike/
  9. says on his website: http://www.mittromney.com/issues/regulation
  10. 47% Romney believes are freeloaders: https://investorplace.com/investorpolitics/romney-explains-secretly-recorded-victim-remarks/
  11. SPY: http://studio-5.financialcontent.com/investplace/quote?Symbol=SPY

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