Stock Market and the Election

Anyway I’ve been calling a 40 percent drop in the S and P 500 since February, and the fact it still hasn’t happened has me now for the very first time wondering if it ever will! I currently have no puts and am in cash on the sidelines, but will go short again if there is a sudden violent rally above Dow = 12,000.

I think the election is the arbiter in all of this ultimately. After that the FED/government may be under democratic leadership, and all the rules may have changed. I can tell you from experience as this just happened in the past year over here with our change in Aussie government.

Paulson may no longer be around to look after his Wall St buddies as a result, as Obama may want to look after the little guy as he promised, but more important than that is the fact there will not be an election for a few years (unlike right now) so the government may finally let the USA have the vomit it is meant to have financially speaking so it can get on with the business of the hang-over, and then eventually begin to feel better again.

Because right now, as American Patriot posted in that article above, on 25 times earnings and with losses mounting (and not profits), the American stock market has created the perfect storm, even bigger than the tech collapse perhaps, where they are pricing-in only blue sky just up ahead, when in fact the clouds are gathering more than ever according to any un-government-doctored fundamentals you look at. (Look at interest rates in real terms and think about the affect that has on inflation for just one example!)

Only question left is after the election, will Obama (if he wins) continue to throw good tax payer money after bad into this fire as is the status quo modus operandi, if he has more incentive to let things work themselves out (and a lot of unruly banks fail) and for the first time in around a decade, have a real way to reduce the huge deficit by actually saving some tax payer money and using it to pay down the two mortgages America currently has hanging over its collective head.

What’s better: a bankrupt United States as a whole when foreign investment eventually pull the plug on the debt binge, or say five percent of USA population being forced to declare bankruptcy, who were probably involved in mortgages/debts they shouldn’t have been in the first place? (Who also happened to create this credit crisis and export it worldwide with their counterparties- the unscrupulous banks.)

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Possibly Related Posts:

• Investing strategy: “buy what China is buying”
• Watching yesterday’s manufactured action fully exposes just what a joke this market is. Let’s take a peek at yesterday’s “trading”:
• My forecast for the next 6 bailouts–Things for bulls to consider
• In recession or depression, people only consume food, go short Retail stocks
• The news from Fed and Treasury only signal the situation is already out of control

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