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Friend-in-Bush sectors?
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December 15, 2000: 6:13 a.m. ET
Fund managers consider which sectors may prosper under Bush presidency
By Staff Writer Jeanne Sahadi
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NEW YORK (CNNfn) - Market volatility and a maze-like presidential election have made this is a tough season for predictions. Just what the new administration means, if anything, for the market is part of what mutual fund managers must assess as they try to divine the investment-worthiness of various sectors in the months ahead.
The Enterprise Group of Funds, for instance, conducted a survey this month of 17 mutual fund managers, including such top-flight names as David Alger, Mario Gabelli and Thomas Marsico. Their consensus? Health care, technology, and financial stocks are likely to do well with Republican George W. Bush in the White House.
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 POSSIBLE SECTOR LEADERS UNDER BUSH
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According to a survey of 17 mutual fund managers by the Enterprise Group of Funds:
Healthcare
Technology
Financials
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On the laggard side, the managers predicted, basic industries, consumer cyclicals, and utilities might have a more difficult time.
Other managers CNNfn.com spoke to agree with some of those picks, but say due to demographics and the general economic climate, those sectors might have shared a similar fate under a Gore Administration, at least in 2001.
Take health care and technology. The two go hand-in-hand in many ways, said Art Bonnel, manager of US Global Investors Bonnel Growth Fund. With Baby Boomers graying and the ranks of retirees swelling, interest in premium, high-tech health care is strong, Bonnel said.
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POSSIBLE SECTOR LAGGARDS UNDER BUSH
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According to a survey of 17 mutual fund managers by the Enterprise Group of Funds:
Basic Industries
Consumer Cyclicals
Utilities
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Or consider financials, said Rose Papp, manager for the Papp America Abroad Fund. The aging population and the growing desire to save for retirement is good for financial service companies under any president. Indeed, the Enterprise survey found the managers selected financials as a sector that would have done well under either Bush or Vice President Al Gore.
The managers did note, however, that Bush's more relaxed regulatory stance may be a plus for regulated sectors. For instance, Papp said, his prescription-drug benefits proposal to be administered by private insurers is perceived as more market-friendly than that of Gore, who was considered more foe than friend to the pharmaceutical industry.
Likewise with tobacco stocks. A Bush Administration may mean less support for the stunningly expensive lawsuits that have hit tobacco companies in recent years, said Bill Nygren, manager of Oakmark Fund and Oakmark Select Fund.
Profit power still rules
But ultimately, Greenspan and growth (or lack of it), not to mention legislative gridlock, are what will affect the market over the next year, the managers said.
"The main thing that drives stock prices is not the President of the United States but earnings," Bonnel said.
And on that front, a slew of disappointing earnings and countless profit warnings, the latest high-profile one from Microsoft late Thursday, have been the yellow flashing lights of a slowing economy.
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"The main thing that drives stock prices is not the President of the United States but earnings."
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Art Bonnel
Portfolio manager
US Global Investors Bonnel Growth Fund |
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So should cyclicals fair poorly, that likely will have more to do with less-attractive growth rates than whether they have a friend in the White House, Bonnel said.
Francis Gannon, manager of SunAmerica's Growth & Income Fund, said he is on the lookout for growth engines in a slowing economy. The areas he's identified are the same the Enterprise survey found as likely to do well under Bush: health care, financials, and technology. But in the latter instance, Gannon is bargain-hunting among select technology subsectors, such as optical, wireless, and semiconductor stocks.
And should the Fed decide in the coming months to lower interest rates, that is likely to have the biggest impact across many sectors, if not directly then indirectly by spurring investment and spending. Then again, especially in a slowdown, so might some of Bush's proposed tax cuts, if they can pass Congress, where there is no clear voting majority.
In the end, two things remain clear: it will remain a stock picker's market and it's still early days in Bush's relationship with Wall Street. "We just don't have enough information yet," Gannon said. 
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