Oh my God! That was the most ridiculous thing I've ever read. You are attributing the stock market action in November the year before presidential elections entirely to those elections? Or even substantially? What a joke!
Trust me: This month's market action has nothing (NOTHING!!!!) to do with the presidential election in 2008 and everything to do with concerns about the credit markets and the economy.
Consider that this is the first thing I've read connecting the 2008 election to the markets. So unless people are making buy/sell decisons on this basis and just not say anything, this is WAY OUT OF LEFT FIELD.
Actually, this isn't as far-fetched as you might think. Newspapers regularly runs articles of this type prior to presidential elections which claim that the stock market does a not-bad job of predicting the party of the presidential election, and those stories often run fairly far out in time. Conventional wisdom is that markets predict the economy six to twelve months in the future -- why should they ignore politics?
Here's an example of such an article from the Washington Post:
http://www.washingtonpost.com/wp...-
2004Jul25.html
If anyone wants to participate in the use of markets to predict political events directly (rather than the indirect phenomenon I noted in this article), check out the work being done at the Iowa Electronic Markets of the University of Iowa. They do remarkably well.
Sorry you didn't like the article; I thought it was at least more interesting that noting that the 10% decline in the market from its high merited the term "correction."
Carl
Come on. That article you linked to was written in late July 2004, less than 4 months from the election.
Of course, the stock market cares about who wins elections and that sort of thing.
The day after the Democrats took a lot of seats back in November '06, health care and drug stocks got hit, for example, thinking the Dems would go after them and hurt their business.
And Wall Street will be interested in next year's election.
But the argument that the selloff this November is a prediction that the Dems will win next year is a joke.
I haven't heard a single mention of that on CNBC, in The Wall Street Journal, Barron's or any of the other media that I read on a daily basis.
Usually, the players involved, the people actually moving the money which determines the way stocks trade, get quoted in market stories.
So, this analysis is off the mark.
Stock Market Corrections Are Beautiful--- And Necessary
Every correction is the same, a normal downturn in one or more of the markets where we invest. There has never been a correction that has not proven to be an investment opportunity. You can be confident that governments around the world are not going to allow another Great Depression "on their watch".
Every correction is different, the result of various economic and/or political circumstances that create the need for adjustments in the financial markets.
While everything is down in price, as it is now, there is actually less to worry about. When the going gets tough, the tough go shopping.
In this case, an overheated real estate market, an overdose of financial bad judgment, and a damn the torpedoes stock market, propelled by demand for speculative derivative securities and Hedge Funds, finally came unglued.
But it is the reality of corrections that is one of the few certainties of the financial world, one that separates the men from the boys, if you will. If you fixate on your portfolio market value during a correction, you will just give yourself a headache, or worse.
Few of the fundamental qualities that made your IGVSI securities sound investments just two years ago have permanently disappeared. We'll be using credit cards, driving cars and motorcycles, drinking beer, and buying clothes twenty years from now. Very few interest payments have been missed and surprisingly few dividends eliminated.
Only the prices have changed, to preserve the long-term reality of things---and in both of our markets.
Corrections are beautiful things, but having two of them going on at the same time is like a trip to Fantasy Land. Theoretically, even technically I'm told, corrections adjust prices to their actual value or "support levels". In reality, it's much easier than that. Prices go down because of speculator reactions to expectations of news, speculator reactions to actual news, and investor profit taking.
The two "becauses" are more potent than ever because there is more self-directed money than ever. And therein lies the core of correctional beauty. Mutual Fund unit holders rarely take profits but rush to take losses. Additionally, the new breed of unregulated index-fund speculations is capable of producing a constant diet of volatility overload. New investment opportunities are everywhere.
Here's a list of ten things to think about or to do during corrections:
1. Don't beat yourself up by looking at your market value. You don't live in a vacuum and you should expect lower valuations. That is why you should only buy the highest quality securities in the first place and stick with a well-defined asset allocation plan. Look for ways to add to your portfolios.
2. Take a look at the past. There has never been a correction that has not proven to be a buying opportunity, in spite of the media hype that this one is somehow special. When they are broad, lo
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