This article will be a bit of a departure from the usual, but ignoring the election results this past week would be like ignoring a six hundred pound gorilla. The real question is what will happen down the road. Initially, on Wednesday morning following the results, the market opened essentially flat and then bounced up on the announcement of former defense secretary Rumsfield's resignation.
The real question, I believe, is what did the elected seek and what will they get. The obvious is that the voters sought a different approach to the war in Iraq and, I believe, a stop to the vicious partisanship and political self promotion in Washington.
I suspect that the market popped a little on the Rumsfield resignation because it at least superficially showed a change in the approach to the war. However, the ultimate question is whether congress will go back to the same old partisanship that has been the earmark of politics for so long.
If there is a return to finger pointing partisanship and we do go back to the same old status, the next two years will probably result in nothing but political gridlock. I suspect that gridlock would not hurt the bullish side of the market particularly, nor would it help it. On the other hand, some positive cooperation may very well be an impetus to further bullishness.
It seems to me that the things most likely to hurt the markets would be higher taxes, particularly corporate taxes, and more governed mental regulation of business. All of this is yet to be seen, but as I write this article I note that the Dow is losing ground and neither the NASDAQ nor the S&P 500 are moving very rapidly upward. All is yet to be seen, and one can only hope for a congress and president that are willing to keep the interest of the governed in their forefront.
Good Trading!
Bill Kraft
Mr. Kraft's past articles are posted on our website for your review.
-- by the Dividend Investor Team
