What’s the one economic trend we can be certain of, regardless of business cycles? The government is growing as a proportion of GDP.
So how do you play it. Well you can invest directly in lobbying for your business, but that’s tough unless you’re already in a fairly privileged position. Or you can be DC/Virginia real estate, which is pretty much immune from the weaknss in the rest of the country.
Or you can invest in GE (GE). Yesterday’s quarterly earnings and conference call made it clear that this is the ultimate big government company. CEO Jeff Immelt referenced the stimulus multiple times in reference to various units: wind, the power grid, rail, health tech, aerospace, defence and on and on.
And of course the company has amazing lobbying clout. Any eventual cap-and-trade system is likely to be based on its own framework. When the company recently announced a new medical tech JV with Intel, it had to go out of its way to suggest that it wasn’t just a stimulus play. But of course, if the government spends gobs on upgrading health tech (in the name of saving money, of course) GE will be a huge beneficiary.
The fact is that GE has everything the government wants right now. It’s blue collar and high tech at the same time. It actually sells real, physical things to the rest of the world — things made by well paid American workers. And unlike other numerous inchoate green tech plays, it’s a real, profitable company.
Now granted, there’s that little problem of the financial business, which could bring down the rest of the house. But we’d assume that the “No More Lehmans” policy includes GE, too. So they’re only going down if other banks collapse, too. And we don’t see that happening at this point.