The equity markets respond quickly to new information. The overwhelmingly dominant piece of new information for the last two trading days has been the election of Barack Obama as President of the United States. We’re not talking about “most surveys say” or “it looks like an Obama win”, we’re talking about the indisputable fact of an Obama presidency. As a direct result of that new information, the market is down ten percent in just two trading days. The market is not responding to what happened in the economy a year ago or even last week. It’s responding to what’s happening right now.

If the American people had voted for capitalism (McCain), the Dow would have been up at least 1,000 points in one day. Clearly, electing McCain would not have come even close to solving the various economic problems we face but it would have reassured the markets (which are, of course, capitalist by definition) that the US still believes in free markets. Unfortunately for everyone, the American people have apparently given up on capitalism.

The equity markets try to anticipate future business conditions. They try to estimate profits going forward and stocks are bought and sold based on the various collective estimates. The election of the pseudo-Marxist racist Barack Obama proves to everyone with actual money in the game that things are not going to get better, that there is no hope that our heretofore capitalist society will be aided by the new president, and therefore money is moving out of US markets at a rapid pace as a logical consequence. It is as natural and expected a result as night following day. Money flow does not lie. People don’t play emotional games with their cash. They are coldly, brutally practical with their money.

What’s sad is that so many people are mystified by the market action. It’s like launching six or seven torpedoes into a ship and wondering why it starts sinking. The American people have been rendered so fantastically stupid, ignorant and moronic by the left-wing media and educational system that they can’t add 2+2 and come up with 4.

As a side note, I’m taking some night classes at UCLA. All of my classes are located in the “Court of Sciences”. Very few of the students speak English as a primary language. The large majority of the students are from overseas. We are educating the world in useful, hard sciences while here at home we obsess about teaching kids that it’s awesome and great to be a queer or to write a thesis on Noam Chomsky and get drunk every night. American citizens are almost entirely focused on destroying and tearing ourselves down while the rest of the world is focused on advancing and bettering itself.

It’s no wonder the American electorate are so fanatically moronic and stupid as to elect an overwhelmingly Democratic Congress while teaming them up with a pseudo-Marxist community organizer as president and then express surprise that the markets drop 10% in two days. The “American experiment” just might be dead and buried.

Django on November 6, 2008 at 6:37 PM

One the stock market is forward looking meaning it is pricing conditions in today for 6 months out. Second. the 185 rally in the market occurred when McCain’s numbers in the polls started to tighten and when the credit crunch started to release. Two good news stories at the same time.
On the day before the election day and the day of the election the reporter for USNEWS and Report was saying that the McCain campaign was in good spirts and thought it might go their way. This reporter is read by a lot of the market.

finally, The coal comments came out over the weekend and gave the market hope that it would lose Obama Oh, PA, Wva and VA. Since his election coal stocks are down 30+% that is all Obama. He has crashed the coal stocks.

If the market rebounds it will be due to technical issues like being oversold (i.e everyone that wanted to sell has sold and only buyers are left)

there is a very good chance that if Obama’s polices are put into place 100% we could see the DOw at 1500 by 2012. a 90% selloff occured in 1932-1942. and in the nasdaq of 2000-2002 bear market.

Right now the market has the following narritive. Obama is going to raise taxes, kill jobs, kill free trade, the economic news is bleak. There is no reason to buy.

If the news changes or if Obama governs differently the market may advance.

The Dow closed out at 9511 on tues during the election. We will be extremly lucky if we see 9511 again in the next 4 years.

This is almost 75% fear of Obama from the market. Check out the transfer of wealth out of the country. The rich are fleeing the US to tax havens.

If the dems get the 401k’s and Ira’s dow may close up shop.

unseen on November 6, 2008 at 6:37 PM

Absolutely, 100% correct. Very good post.

Django on November 6, 2008 at 6:47 PM