Common Cents for November 16th 2012

Applicable as of July 1, 2025: Oakworth Asset Management, LLC (“OAM”) is a registered investment adviser that is owned by Oakworth Capital Bank Inc., Member FDIC (“OCB,” or together with OAM, “Oakworth”). Please note that OCB and OAM are separate entities that provide different services. All investment adviser services including investment management and financial planning are provided by OAM. OAM only began operations on July 1, 2025. Any content that was created prior to that date is specific to OCB and not OAM and is provided for informational purposes only. The statements or opinions expressed in this article do not necessarily reflect the views or opinions of OAM. The article was produced prior to OAM’s registration as an investment adviser and therefore was not reviewed for compliance under the Investment Advisers Act of 1940. OAM believes that the prior content is appropriate because of the similarities in OAM services to OCB services. The individuals involved in the production of OCB content will also be involved in OAM services. For additional information about OAM, including its services and fees, send for the firm’s disclosure brochure using the contact information contained herein or visit advisorinfo.sec.gov.

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…