Understandably, many of the questions we fielded last week were in regards to the election and how its results might affect the stock and bond markets. Many conversations were had in the prior weeks and months, as well, in “preparation” for the inevitable market-changing event that was the 2012 U.S. Presidential Election.
This is not meant to be an opinion piece about the election – how I feel about the candidates and their respective parties should be of no interest to you. I am conditioned at this point not to care so much about who is our President, but to focus my energies on what the potential effects might be on client portfolios. What most people I spoke with seemed to find interesting was my opinion that it wouldn’t much matter who was elected.*
The general consensus was that the market would be favoring a Romney/Republican win, as the more business-friendly platform. My response: “If the stock market hated the Obama Administration and its policies, I think we’d know it by now.” Would it have liked Romney’s more? Maybe- but what’s the sense in discussing that today? Are some industries poised to do better under Obama than they would under Romney, and vice versa? Sure. But something that has proven over time is that the stock market likes certainty – and while this seems to be a rare commodity these days, at least we know what we’re getting with Obama. Whether or not we like it is a different story.
A major complaint about Obama’s first term was the inability for Democrats and Republicans to work together and find workable solutions to our country’s problems.** Provided this improves, even slightly, over the next four years and in keeping with the theme of trying to focus on things that could go right:
- Unemployment ought to continue drifting lower
- Record levels of corporate cash should get put to work (in some fashion) once the new tax code is revealed
- Consumer spending, which has already improved more quickly than most thought it would, still has plenty of room to run
- Housing prices, starts, and sales are all ticking higher – pretty soon we may stop talking about how far we still are from the top
- Historically low interest rates remain an impetus for investors to shy away from fixed income securities
So, political rhetoric aside, isn’t the sensible thing to simply make adjustments as necessary based on the facts as they present themselves?***
We see the potential for a very strong 2013, and maybe even the next couple of years in the stock market. Are you positioned accordingly?
Have a great week!
* I have no evidence that anyone actually found this interesting.
** This is their job, not my opinion.
*** This is our job.
Adam B. Scott
Argyle Capital Partners, LLC
10100 Santa Monica Blvd, #300
Los Angeles, CA 90067