Different investors utilize different strategies to make the most profit. I’ve seen a lot of fascinating ideas over the years, but one came across my desk this week that made me smile and think. It is based on American stock exchanges S&P500 and this is a solution that I think all investors should consider!

History

The idea comes from recent events Intel (NASDAQ:INTC). Already in August, Intel announced that the US government would acquire 9.9% of shares in the share capital. This was funded mainly by the government’s conversion of unpaid or promised subsidies. Whatever the case may be, the government now has a passive stake in the company.

When I look at Intel, it makes sense. Having domestic chip manufacturing capabilities is a national priority for America. Intel is perhaps the only semiconductor company that conducts cutting-edge research and development, as well as some manufacturing, in the US.

This therefore serves the purpose of both parties. The government is getting some support in reducing dependence on foreign companies and related countries. As for Intel, it is widely known that it has struggled with competitive and financial problems in recent years. The transaction provides Intel with a significant boost and the opportunity to expand production in the US.

The numbers add up

Let’s go one step further. Based on the government price, it has already increased by 94%. If an investor had bought Intel shares at the time of its announcement, they would have increased by 59% in just two months!

Intel is up 84% over the last year. So much of the movement during this period has occurred since the August announcement. This highlights the unique strategy of considering buying U.S. government-backed stocks.

To be clear, I’m not suggesting blindly buying the stock. There have been cases where government investments have backfired. For example, in 2009, 61% of shares in General Motors were acquired. When it was sold in 2013, the administration actually lost money to the tune of about $10 billion!

Instead, after the deal is announced, the investor can conduct their own research and assess whether government involvement could provide a significant boost for the company. If it were possible (as in the case of Intel), it might be worth considering this option in the portfolio.

On the other hand, if the investor does not fully understand the business or the stock is too risky for his or her tolerance, this can be passed on. The administration’s idea for a fresh equity stake is more of a cautionary one, so when a headline appears, investors have an opportunity to shop around.

Final thoughts

The idea of ​​researching stocks after the government’s involvement is announced can provide potential investment opportunities. After all, he should benefit from preferential treatment from the administration. However, there are risks.

Of course, there may be changes in government policy. And in Intel’s case, it still faces an extremely competitive industry. Even with government support, it could still lose market share outside America. He may also struggle with restricted strategic flexibility because he may be under pressure to act in a certain way.

Even with these concerns, I think this is a really fascinating strategy for investors to consider. As for Intel, this is also an example worth considering in the portfolio.