Political policy prescriptions can affect the market. As evidenced by Clinton's ill advised attempted take-over of the health care industry. Health care stocks took a pummeling because of the government take-over threat. Most wall-street pundits and economists would agree with that historical analysis.
When Clinton went after Microsoft in a big way. The market was in a tenuous position, having run up to historically high PE ratio's. The timing of the attack was ill advised. It did effect the technology sector. At least for the short term. Most people would agree with that historical perspective as well.
Having said that, it doesn't mean I believe Clinton had nothing to do with the market going up so dramatically during his term. He did sign GATT and NAFTA and supported the internets development by keeping the government off dot.coms back and out of the way while their creativity soared. Not a small feat considering the strident liberal Democrats in congress who wanted to tax the internet, and people like Hillary Clinton who wanted to put government controls on news gathering sites.
The questions you should really be asking now is; has Bush's policy initiatives accelerated, or caused in the short term the market to decline? Unfortunately, the answer largely depends on your own political/economic philosophy.
I would say he has helped the economy by allowing people to keep more of their own money, and thereby stimulating businesses to invest in plant production, thus preventing a recession. Others, (who are largely looking at it through partisan political eyes), would probably say the miniscule tax-cut was the sole cause of the deficit increasing, which caused wall-street to abandon their investments and go short. Still others (who are completely partisan blind in my eyes), would say the auditing problems are the sole fault of Bush, and have been the main reasons investors lost confidence in their portfolio's.
As I said. It largely depends on your economic philosophy, and political outlook on life...
My personal belief is the market is still correcting from the "irrational exuberance" it experienced during the dot.com boom. The fall-out from the hardest hit communications sector is having a lot of unforeseen repercussions. The auditing problems, which have nothing whatsoever to do with Bush's team, have exacerbated the situation. Those two issues, combined with the uncertainty of another terrorist attack, have created the present situation we're in.
Stock selection is the key now. Some companies in the dot.com area have been hit very hard but will survive and make money long term. When they turn around is anybody's guess, but eventually if their earnings are sound, they will prosper long term.
Take Care,
Michael
p.s. insp did well during a brutal week. :) |
