Obama's Second Term: Best And Worst ETFs To Invest In

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President Obama's agenda the next four years could be a boon or a bust for some stock sectors. Here's an overview of what investing strategists say are the best sectors to buy and steer clear of.

• Health care: Among myriad changes, the sweeping ObamaCare plan enables more than 30 million uninsured Americans to receive health insurance.

This brings an onslaught of new customers to hospitals, health insurers and drugmakers, but the added rules make it difficult to determine how profitable they'll be.

For example, health insurance plans have to provide preventative services without copays, do away with annual and lifetime coverage limits and cover new patients with pre-existing conditions.

Automatic federal spending cuts slated for next year would trim Medicare payments to hospitals by more than $5.8 billion and drug benefits by $591 million.

The winners and losers will vary depending on whom you ask, and there are just too many issues that still need to be worked out, said Robert Laura, president of Synergos Financial Group with $25 million in assets under management in Brighton, Mich.

He believes investors' best bets lie with firms akin to those who sold picks and shovels during the gold rush. Those includeStericycle ( SRCL ), the medical-waste disposal king, andMcKesson ( MCK ), a tech firm serving all aspects of the health care industry.

Real estate investment trusts specializing in health care facilities or hospitals will also benefit from increased health care spending.

John Graves, editor of "The Retirement Journal" recommendsHealth Care REIT ( HCN ),Ventas ( VTR ),Medical Properties Trust ( MPW ) andSabra Health Care REIT (SBRA).

While plenty of health care ETFs and REIT ETFs exist, none invest only in health care REITs, health care technology or medical waste.

Biggest 2nd-Term Losers

• Aerospace and defense: Federal budget cuts set to go into effect January amount to $109 billion through Sept. 30, 2013, and $984 billion over nine years.

Navy aircraft spending is slated to be reduced by $2.2 billion, or 9.4%, and Army operations $6.9 billion, or 9.4%.

That will have an impact on the bottom lines ofBoeing (BA) and Lockheed Martin (LMT), which make military aircraft and missiles, said Jonathan Hill. As an investment strategist at Gibraltar Private Bank & Trust in Coral Gables, Fla., he manages more than $600 million in client assets.

Both stocks are major holdings iniShares Dow Jones U.S. Aerospace & Defense (ITA) andPowerShares Aerospace & Defense (PPA).

Most of the blue chip defense and aerospace contractors pay a dividend that could be cut should profit and sales decline, said Robert Luna. He's CEO and chief investment officer at SureVest Capital Management in Phoenix, Ariz., with $100 million in assets under management.

"I don't think the worst-case scenario has been priced into them yet," Luna said.

• Coal: The coal industry, which accounts for 42% for the country's electricity, had already been suffering from having to compete with free-falling natural gas prices the past four years.

Some older coal plants have been forced to close because of expensive upgrades required by toxic emissions regulations that were already on the way before Obama took office.

Coal producers are bracing for harsher emissions rules in Obama's second term.

Market Vectors Coal ETF (KOL) plunged 5.5% the day after the election.

It's lost 27.13% year to date, much steeper than the 4.86% loss for energy stocks tracked by Morningstar Inc.

J. Camarda, chairman and chief investment officer of Camarda Wealth Advisory Group in Fleming Island, Fla., expects KOL to fall to new lows. Camarda has $250 million in assets under management.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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