Nothing. And there lies the problem. Quite frankly, I don’t think it really matters who is in the White House. Democrat or Republican, they still have to deal with the 535 Senators and Representatives who prefer to govern so that they are re-elected rather than the good of the Republic. They place earning a few partisan political points above serving in the best interest of the country.
Both parties share blame for where our country now stands. Both parties have buried their heads in the sands of party politics long enough. If you have listened to the early rhetoric coming out of Washington, it doesn’t sound like either side is willing to make that first reach across the aisle to begin the process of coming up with bipartisan ideas to fix the economic woes that face our country now and in the future.
I believe that is why you have seen the financial markets roll over and essentially die since the election. A big vote of No Confidence in the federal government’s ability to solve anything is what investors are saying. It is also serving as a much needed correction in the stock market. Since the bottom of the market in March 2009, stocks have been rising with little or no interruption. Periodically, those rises need to stop and prices come back some. This has been due for some time and the election has provided the catalyst for it.
Typically market corrections knock anywhere from 5% to 10% off the market highs. The S&P 500 is off about 5% as of this writing (November 15, 2012), so this correction could have a ways to go. I don’t believe that it has the legs to crash like it did in 2008. Even before this little downdraft, stock prices were not overvalued by historical price/earnings standards. In addition, investors have been pulling money out of stock mutual funds pretty consistently over the past 15 months. So to me, this resembles the typical periodic market correction in a bull market cycle.
This market correction will run its course. Investors will begin to refocus on corporate profits and sales revenues. However, in the longer term, if we ever hope that our economy will grow again at a rate greater than the 1.5% to 2% growth rate it has done the past couple of years, we will need to deal with the debt in a meaningful and bipartisan way.
I am one (and there are many more) who believes that the United States is but one good budget agreement away from a resurgence to the top of the world’s economies. The doom and gloom that pervades both the media on the left and right fails to look at the great companies and great innovations that still come from our country. It’s time for each of us to step up and take the extra time to contact our elected officials and demand that they begin finding solutions together to our revenue and entitlement problems. As they do this, our economy will surge ahead, creating more jobs, raising more revenue and raising everyone’s standard of living. Something will have changed!
Saving and investing is a discipline, not a gamble. Successful, long term investors develop a plan and stay with it regardless. They don’t get blown this way and that by the latest headline or economic report.
Mike Berry is a Registered Representative offering securities through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Legacy Wealth Management, LLC and Cambridge are not affiliated. Cambridge does not offer tax advice.
Copyright ©2012 Mike Berry. All Rights reserved. Commercial copying, duplication or reproduction is prohibited.
