Tuesday, December 9, 2008

Obama's Economic Stimulus Plan

There's been a lot of talk about Obama's new economic stimulus plan. The word "infrastructure" keeps getting thrown around, and I think its getting misinterpreted. Because we keep hearing infrastructure, every stock in that space is getting a pretty good bump. Here are some of his words:

"Hence Mr. Obama's emphasis over the weekend on spending on "infrastructure" -- build roads, modernize schools, expand Internet access, improve buildings' energy efficiency, put better technology in hospitals."

"The need for a big economic jolt means "we can't worry short term about the deficit," Mr. Obama said on NBC's "Meet the Press." "We've got to make sure that the economic stimulus plan is large enough to get the economy moving."

I'm not sure how much of the money is going into the "build roads" part of the conversation. I think we're going to see investment in internet infrastructure to help make a network of collaboration. Also, I believe a lot of it will be geared toward energy efficiency. New heating and lighting systems in government buildings, and encouraging businesses to do the same through tax credits.

Based on what I've read, I also think there is going to be some federal money to jump start the alternative energy movement. My guess is Washington is going to help invest in a new or updated power grid. This will allow rural areas, which can help in power generation (wind and solar power are often generated in remote areas) to be connected to the cities that need the power.

As an investor, I'd be looking in those areas. Internet Infrastructure: How about Cisco (CSCO). I think Google (GOOG) is going to play a role in this as well. Take a look at www.google.org for some of their ideas.

Power Grid: You have to think of GE (GE) a bit here, but they're too big for me. I've been behind ABB (ABB) for awhile in this space, and I think its a good buy here.

Its anybody's guess for solar stocks. I think the industry as a whole will get promoted, but the stocks aren't cheap. I'd probably look for an ETF here.

Also, I like geothermal energy. Its much cheaper than solar and is pretty accessible right now. I'm going to do a specific post about this, but the stock I'm looking at for this is Ormat Technologies (ORA).

Here's some more reading about Obama's plan.

Disclosure: Long GOOG,ABB.

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