Common Cents for November 16th 2012

The election is finally over, and the market has fallen apart since. What in the world is that all about? Aren’t stocks supposed to rally after a Presidential election? If so, why is this time different than the past?

Well, this go around, we have something everyone is calling the fiscal cliff looming at the end of the year. This is when all the various tax breaks and credits end, and automatic spending cuts kick in. If nothing happens, if the two sides don’t reach a compromise, we could have a wicked way to start 2013. After all, a reduction in disposable income and government expenditures ain’t what the Keynesian doctors ordered, and the economy isn’t in as good a shape as we would all like. So what is the hang up? Well, to hear the pundits tell it, the two political parties can’t seem to decide on how to tax the so-called rich. This has been a bone of contention for some time, with the GOP coming across as intransigent, and the Administration appearing to engage in some sort of income class warfare. Frankly, it is kind of comical, and I wrote about this very thing in my column in the Montgomery Advertiser last week.

Since I don’t feel like reinventing the wheel, let me just give you what I wrote there:

On Wednesday (11/7), the markets sank like a stone. I thought stocks typically rallied after Presidential elections. What gives? Are the markets saying they don’t like Obama?          

That would be an easy kneejerk reaction to make, but it doesn’t hold up too well when you delve into the numbers. After all, just where are the investors? Well, intuitively, people who make the most money will have the most to invest. That makes sense, so what states have the highest incomes?   Read On…