I’m already an election winner

Stock market pundits are falling over themselves trying to predict the winners and losers from the election.

They’re too late. I’m already an election winner.

On Friday afternoon, I placed my single largest gambling bet ever — $850 on a Coalition election victory at odds of $1.06.

My normal gambling bet size is closer to $10. I’m a social gambler, betting almost exclusively on televised sporting events, like football, tennis and cricket, always looking for value bets.

But the 6% return on investment, for what everyone knew, including KRudd himself, was a certain Coalition win, was simply too good to refuse, even at the skinny odds on offer. I’m now $50 to the good, and in double-quick time.

I strongly suggest you don’t try this at home. History is littered with “sure things” being rolled. Placing large bets on horses, dogs or sporting events at odds of $1.06, or less, is bound to end in tears.

Clive and Tony — if you thought that guy never shuts up…

I reserve my really big bets for the stock market.

I also don’t gamble with my investing money — plonking my hard earned money down on some long-shot mining exploration company with as much chance of hitting the big time as Clive Palmer has of having a civil policy discussion with fellow MP Tony Abbott.

One thing is for certain. The political circus will go on, definitely bigger, and likely no better than ever before, especially given the likely make up of the Senate.

Clive Palmer

Relief at last for the poor mining billionaires

Speaking of our incoming prime minster, plenty in the business community are seemingly celebrating the Coalition election victory.

In The Australian Financial Review, Fortescue Metals Group (ASX: FMG) CEO Nev Power was quoted as saying…

“We look forward to a period of political stability and policy from Government that consults with and listens to the people who create wealth and opportunity.”

We’ll see. When it comes to politicians, there is a very big difference between “listening” and “campaigning”.

And even if Tony Abbott does listen to people like Fortescue’s billionaire Chairman Andrew “Twiggy” Forrest (net worth $5.7 billion as at March 2013) , there’s no guarantee opportunity will indeed be created.

After all, it was only a year ago when “The New Force In Iron Ore” cut 1000 workers in response to a tumbling iron ore price… which had absolutely nothing to do with the carbon tax or the mining tax.

I hate to disappoint, but it’s business as usual after the election…

The bottom line is today might herald a new era for a few politicians, but for the rest of us, it’s business as usual.

In the vast majority of cases, wealth will be created, or destroyed, regardless of which leader, and which political party is in power.

There are some exceptions, but they are the outliers.

Salary packaging company McMillan Shakespeare (ASX: MMS) is a classic example. Its shares halved after the Labor government announced plans to make it harder for McMillan’s customers to claim the tax perk.

The legislation was never likely to see the light of day, given the Coalition’s vow not to enact the proposal and Labor’s dire standing in the polls. But that didn’t stop the market, in its time honoured fashion, shooting first and asking questions later.

Not surprisingly, McMillian Shakespeare is high on many election “winners and losers” lists doing the rounds.

But more surprisingly, to some anyway, is the stock market’s early reaction today, not to just McMillian Shakespeare, but in general.

In case you think you’ve missed the post election boat…

The S&P/ASX 200 opened this morning as flat as a pancake, as did McMillian Shakespeare shares.

The stock market always looks forward. It hates uncertainty.

This election result has been virtually locked in for the last 3 years, and became all but certain in the last two weeks. I DO NOT place $850 bets lightly, or ever before.

The best time to buy a stock like McMillian Shakespeare was when there was blood in the streets, when panicked shareholders sold out of this former “wonder stock” indiscriminately, regardless and oblivious to the overwhelming odds that the proposed Labor legislation would simply die on the vine.

“Buy to the sound of cannons, sell to the sound of trumpets”

I’ll let you into a little secret… Scott Phillips and Joe Magyer, our Motley Fool Hidden Gems co-advisors, rushed out a buy alert the very day after McMillian Shakespeare’s stock had plunged 50% from its recent high.

They didn’t quite pick the bottom of the stock, but were pretty close. The shares are up 35% since the recommendation… not bad in a few short weeks.

Put simply, the odds were in their favour. Just like they were when I placed my $850 bet on the Coalition. Try as I might, I couldn’t see ANY circumstance under which they wouldn’t win the election.

On putting the odds in your favour, Charlie Munger, Warren Buffett’s billionaire sidekick, in a 2001 Harvard Law Bulletin interview, said…

“Look for more value in terms of discounted future cash flow than you’re paying for. Move only when you have an advantage. It’s very basic. You have to understand the odds and have the discipline to bet only when the odds are in your favor.

What did happen to the Wall Of Money?

If you’ve read some of our recent Take Stock emails, you may recall me talking about the potential “wall of money” waiting to be invested in the stock market.

Based on today’s stock market reaction, it looks like a mere trickle of the billions of dollars tied up in low interest term deposits has made its way into the market.

It’s still coming… as is confidence, and the makings of the next bull market

But… that’s no surprise to me.

The Coalition victory was already priced into the market.

What’s not priced in is, finally, the end of the debilitating, sapping, 3 years of election campaigning, and the shot of confidence that’s coming to the Australian economy.

Consider this…
— No more attack-dog Abbott, opposing everything and everyone.
— No more attack-dog Murdoch-press headlines.
— No more Labor in-fighting, including no more KRudd.
— No more “poor me” mining billionaires railing against the government.

Last Friday, over a couple of post-work beers, Motley Fool Share Advisor Investment Advisor Scott Phillips and I were casually chatting about the companies on that subscription-only service’s scorecard.

I admit it… we’re totally biased in liking these 15 ASX stocks

We are totally biased, of course, but the general conclusion we came to was we’d assembled a top class list of high quality ASX companies, ones we’d each be prepared to put more of our own money behind.

To make things easier, and to force us (and hopefully you) to focus on our highest conviction investing ideas, each month we produce a list of our top 3 ASX best buy now stocks.

Scott is even more bullish than ever about this month’s top picks. I share his enthusiasm, and am keen to put my own money where my mouth is by purchasing at least one of the best buy stocks for my own portfolio.

(In case you’re thinking otherwise, in accordance with The Motley Fool’s strict trading rules, and the law, I will make any potential purchase at least 2 full trading days after the recommendations have been issued to Motley Fool Share Advisor subscribers.)

The next bull market could be just around the corner…

With the press and business leaders focused on the election result, today could be just like any other stock market trading day.

Some stocks are up. Some are down.

There are some surprising moves, like the 3% fall in McMillian Shakespeare shares, and there are some normal moves, like modest gains for the big four banks.

Time is an investor’s greatest friend. Time in the market, time for investment theses to come to pass, and time for wonderful businesses to grow, compounding your investment dollars into large, wealth-changing fortunes.

As ever, today just like last Friday, I advocate investing money regularly into the stock market. Like everyone else, I don’t know if a stock market correction is just around the corner, or if today is the start of the next bull market.

But I do know great companies, bought at good prices, when the odds are in your favour, always will be your pathway to investing riches.

Bruce Jackson does not own shares  in any of the companies mentioned in this article

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