Can you tell me how many people said they were going to wait until after the election before they put any money back in the stock market? Not just people you might know personally, but talking heads on the stock market programs, or even the radio commentators?
Of course, radio and TV have been blanketed with commercials that suggest you should buy gold and, perhaps, silver, but if you look at the gold chart, it’s been virtually flat for the past few years. One of the commercials mentions a Citigroup forecast that gold would go up to $2,400, which would be a 40 percent gain. That’s known in the advertising and debating world as “an appeal to authority.”
Citibank has such a wonderful record that it lost about 90 percent of its value during the 2008 mortgage debacle. Not only that, a few weeks ago, Citibanks’s CEO, Vikram Pandit, was offered the guillotine – figuratively – or to take his personal belongings out of his office. A classy outfit, that Citigroup, isn’t it?
Now let’s get back to all those forecasts from those who said, in effect, that things would calm down as soon as the election was over. They were off by just a little bit.
The week after the Tuesday election, when the market dropped around 300 points, was actually one for the history books. Surely it couldn’t be Obama’s election, since he had the edge for weeks before the election.
There are some who said it was the so-called “fiscal cliff,” in which taxes would soar – and not just for the very wealthy. But, if anything, the fact that the Republicans held onto the House means serious negotiations will have to take place before any significant tax hike can take place. The Republicans object to a surcharge on those whose income exceeds $250,000.
At first that might seem fair – after all, by any standards, a quarter-million dollars is a lot of money. But in terms of what makes this country grow, it’s just this kind of individual, who is willing to risk everything, who is responsible in large part for laying the groundwork for the mighty edifice of capitalism.
Whether you’ll swallow that or not, you have to admit that, as I have previously mentioned, more and more voters are voting for the party that gives them things they won’t have to pay for.
One more factor we didn’t discuss is the trillions we owe to China and other Asian countries. Will it cause inflation here? Will that make our dollar dramatically less attractive to our debtors? I personally don’t think so, because I read “The Little Golden Book of Monetary Policy” when I as in third grade.
Bud Stevenson, a stockbroker, lives in Fairfield. Reach him at [email protected]