The above statement may seem a bit extreme; but, believe it or not, seemingly intelligent people reacted exactly that way during the six trading days following the November election.
The S & P 500 was down 5% (it has rebounded 12% as of March 1). These people were obviously surprised by the outcome. But most did not find this outcome terribly surprising, considering the Republican challenger was a weak candidate who dug himself a very deep hole with many segments of the electorate.
Why the surprise?
I believe it is because of the information bubbles that have been created around the hyper-partisan political factions of the modern United States. These bubbles have been inflated by rhetoric on the Right and Left that at times veers so far from reality it is tough to reel people back in. Although most sides are guilty, the most egregious award goes to the Right, its blogosphere and radio/ television media. Aha, you say this guy is a real liberal. Maybe so, but I will rely on historical fact to bring my point home…but first an anecdote.
I was in St. Louis this week visiting family and had a chance to visit an old A. G. Edwards colleague and former client, who is now the chief investment officer of his own firm. We got to talking about what I was up to with kortsessions.com re. media malpractice and it struck a nerve.
Prior to the election my friend was on a routine update visit to important clients in the Southeastern part of the country. He related how confused and angry the mood was among these folks, many of whom were professionals and successful business people. They were worried about the country and were especially upset with the Obama Administration. They were terrified by the prospect of a second term for the President. They were scared to death about losing their guns. They repeated the mantra that Mr. Obama was a “socialist” or, even, worse a “communist”. All of this fear, of course, was stoked by the 24/7 blasts from the folks at Fox News, Messrs.’ Limbaugh and Beck, and the plethora of inane blogosphere sources. This is not to mention the un-rebutted BS that was being spewed by the Republican presidential gaggle…like the one from Newt Gingrich on the President’s world view being tainted by the “Kenyan, anti colonial” ideals of his father.
Give me a brake! It was an inflammatory and stupid thing to say. Neither the leaders of the party, nor the Right Wing media complex ever called Newt on this, just as they never bothered to discredit the crazy “birthers”. There are still a great number of people out there that believe the President to not be a U.S. citizen. These same uninformed souls do believe the Prez to be a member of the Islamic faith.
Now just so you don’t quit reading here, I have some real historical facts to offer vis-à-vis how liberal President Obama looks in the light of one of his Republican predecessors.
Let us look at the record of Richard Milhous Nixon, pre Watergate.
Did you know Richard Nixon —
- Created the (much scorned) U.S. Environmental Protection Agency to enforce laws passed by the Congress, December 2, 1970.
- signed the Occupational Safety and Health Act of 1970, then created the bureau to administer it.
- He tried to do Healthcare, but that was an act too far.
- Oh yes, he started the process of normalizing relations with Communist China.
No one ever called him a socialist or a communist. By the way, all of this was pretty liberal stuff for the time. In today’s world Mr. Nixon would be red meat for the right wing talkers.
This is not to excuse the Constitutional crisis Richard Nixon put us through with Watergate, but it is to demonstrate how far we have gone off the track, vis-à-vis politics, in the United States.
How does Barack Obama’s record stack up vs. Richard Nixon? Save healthcare (which could have been a better program had the Republicans chosen to play), it doesn’t. Nixon accomplished a much more liberal agenda. And China was a real coup, as until the time of Nixon extending the olive branch, U.S. /China relations were as cold as current U. S. relations with Iran and North Korea. Could you imagine the uproar if Obama tried to embrace North Korea, Iran or even Cuba?
I need to make one other observation regarding the President’s orientation toward business and finance. You often hear the assertions “he doesn’t understand business” or “he’s anti business”. Well I can see where people might get that idea, in light of the rhetoric that M. Obama used after the blow up in 2008. I might point out that no one has gone to jail and the banking industry has not been nationalized. Finally, with several of the major stock market indices approaching new all-time high, logic would tell me he seems to understand something about the workings of business, at least enough as not to gum up the recovery.
As for guns, this is one I simply don’t get. With all of the recent gun violence tragedies there is not one proposal out there to confiscate firearms. My only explanation is that those who pay attention to the noise on the Right, have heard this charge so many times that they believe it the truth, regardless of much evidence to the contrary, just as they believe Barack Obama to be a radical socialist.
I have digressed in a major way. I return to the point.
Many of the fearful people, people fearful because of the media bubble that they live in, did sell stocks immediately after the November 2nd election. Obviously their media sphere did not help them to make a good investment decision. Now that the much feared apocalypse did not happen, they are back asking my investment-manager friend about getting back into the market. Methinks it might be time for a normal correction.
The information presented in kortsessions.com represents my own opinions and does not contain recommendations for any particular investment or securities. I may, from time to time, mention certain securities for illustrative purpose, names where I personally hold positions. These are not meant to be construed as recommendations to BUY or SELL. All investments and strategies should be undertaken only after careful consideration of suitability based on the risks, tolerance for risk and personal financial situation.
2 thoughts on “Session 11–OMG!! Obama is Re-elected. Sell Everything!”
First, let me thank you for your thoughtful blog. Now, I have to chime in for a moment…
I personally believe that the President wants to implement his agenda for social justice but I recognize that he still must endear himself to the wealthy liberals who provide the financial backbone of his support. This requires him to move cautiously and pick his targets carefully.
I believe that the lesson for investors is that regardless of Mr. Obama’s personal agenda, he has a limited ability to act unilaterally and swiftly. Just because the sky has not yet fallen, it doesn’t mean that the threats caused by policies that favor deficit spending and wealth redistribution are not real.
Thank you for this comment. I do not deny the threat to our economy of deficit spending and loose monetary policy are real. A continuation of these policies will lead to inflation that will hurt the poor to a much greater extent than rhe rich. I can’t control the outcome. What I am trying to do with this blog is provide thought process to help people position themselves in a way to best cope with the fiscal/monetary situation we are in, especially in light of the constant media malpractice we experience.
In my mind the President should take a page out of the Nixon play book…..in Nixon’s day most Americans viewed any communist as evil,someone to fear and not to trust. As Richard Nixon in his early life was a California congressman who held position on the House Unamerican Activities Committee (HUAC), he had impeccable credentials as an expert on the Red Menace. When he warmed up to Red China as an expert, well people accepted, because if Nixon thought we could deal with these people, maybe we could.
The only way we are going to deal with the main cause of our long term deficit problem is entitlement reform. The best person to call for shared sacrifice and advocate for the moves to put us on a better path is a bonifide liberal. Although President Obama would have been considered a moderate Republican in Richard Nixon’s day, he has those liberal Democrat credentials today.
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