Really. Since when is a democratic victory something that is truly perceived 'good for the economy?' Yeah, we all know that it was the economy, stupid that cost John McCain the presidency, and all but tossed republicans on their asses in the House and Senate, holding majorities and actually gaining seats. Of course #43 had quite a lot to do with it as well. I'm man enough to own up to that. He's had a pretty rough go of it for the last couple of years. And yes, I'm going to say it; George W. Bush has done more to divide the republican party in 8 years than anyone perhaps in the history of the GOP. We now have our work ahead of us. A lot of work. We have to rebuild this thing. It isn't going to be easy.
Back to the economy.
A guy at work today who is a staunch Obama supporter swore up and down we'd see the Dow Jones Industrial Average hit 10,000 points today as a result of the Obama victory.
I laughed. I entertained the idea. But I laughed. I then softly explained to him that the stock market is about business. It's about capitalism. It's not about socialism. It's not about higher corporate taxes. It's not about redistribution of wealth. It's not about big government and lots and lots of regulation. It's never historically been about democrats.
Today the Dow shed a whopping 486 points to settle at around 9,139. That's right in line with what the market should have done in the event democrats would be in power. The truth is that in order for us to have seen the Dow reach the 10,000 plus point number, we'd have had to have seen John McCain headed for the White House. That obviously did not happen, and neither did the huge rally we would have seen today on Wall Street if it had. If we would have seen a small rally today, it would have been more about certainty in the markets than about any strides the democrats might make with regard to resurrecting the economy.
This is not to say that the economy will, however, not see a rebound. In fact, it's very highly likely that we'll see this happen during president Barack Obama's historic first term in office. The fact is that if all predictions come true, we'll see the end of this bear market in 2010 or 2011. That's not Barack Obama policy working the markets and the economy. That's just the order of business. That's how the cycle works.
Of course Barack will get the credit for the whole thing. He'll be hailed and honored. He'll probably even see himself enter into a second term in office. It's almost inevitable. He doesn't really need to do a whole lot. The cycles will work in his favor. Plus, with control of both the House and the Senate, he won't have much difficulty getting things passed, though his nationalized health care idea is still a huge pipe-dream. We won't see it happen in our lifetimes.
The Dow will be at 10,000 or better soon enough. It didn't happen today. It won't happen tomorrow. In fact, I'd venture to say we won't see 10,000 until mid 2009 at the very earliest. Again, I'm no expert, but I can make observations. Here's why I think so.
We know who the president is going to be. That takes out that important question. That's that certainty I was talking about. But there's much we don't really know yet. The market now has to be concerned about what President Obama is actually going to do now that he is the president. That piece of uncertainty, in my opinion, will hold back any major surge in the Dow for the short term.
In January when he actually takes office we'll get our first real glimpse. We'll see the future through his first 90 days in office. Once we have that better picture, then its off to better times. Then we can start pricing in Obama policy in our stock valuations. And then we can begin the healing process.
Yes, we can.
Let's just not get ahead of ourselves.
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