You’re only going to have those mud-slinging ads on the television and the radio, and in newspapers, e-mails, blogs, tweets and instant messages, for two more weeks. Is it a revolution, an evolution, or just more of the same? I do remember the feeling we had about 1994’s Contract with
when it appeared that an amazing revolution had occurred. Those “term limit” promises (and most of the rest of that contract), however, fell through the floor as politics conquered the winning candidates the day they got off the plane in America But I’m hopeful, and skeptical, almost to the point that if they will just stop those ads, I’ll take whatever they give me. Yet, the world certainly needs a revolution. Washington, D.C.
So how is the market responding to this election? As we get closer to erasing the April-July 2010 correction, the market’s recent actions resemble what we saw in 1994 with a similar type of rally. That year sure does seem to have a close correlation to today. However, that’s not the whole story. One year later in the fall of 1995, we saw a market that had rallied significantly from today's date in 1994. You can see this in the chart below :
On another note, this week is a big earnings announcement week, with about a third of all companies having released Q3 earnings by this coming weekend. So far, those early reporters have been very strong, surprising on the upside. The reported earnings that are always stifled in those periods of excess, are still trying to catch up with our “normalized” earnings. We believe that will occur in the next two quarters. That was pretty much our expectation based on history early in 2009 as the releases were writing off everything including the kitchen sink. We are getting closer to normal, but we’re not quite there yet.
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