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Please, the stock drop is all about Obama - Opinion

November 7, 2012: 4:45 PM ET

By Lee Munson

The Dow drops 300 points and everybody is tripping over themselves to say something else is to blame. But come on – everybody was expecting a drop with an Obama win. I sure was, and I even voted for him.

As for the other reasons people are giving:

Europe - really? You just woke up and realized that Europe is heading into a recession next year. Saying today is about Europe is a nice way of saying you don't like Obama. 

The fiscal cliff? Please! We have the same two dudes we did a year ago -- Boehner and Obama. Nothing has changed. They still have to go into a room, cut a deal, and move on.

Fact is, most people on Wall Street are Republicans, and they see Obama as anti-business. I get it. So now Wall Street is reducing year end price targets for the S&P. They think we have the status quo, Boehner and Obama doing nothing, polarized federal government, and lame duck sessions in Congress.

But here's the thing. We are making a big assumption that what happened over the past few years will stay the same. And that is a bad investment strategy. 

Sure, there could be pressure on high dividend paying stocks if Obama gets rid of the low dividend rate. And I'm not exactly going to go out and buy up coal stocks (not that I was interested in them in the first place).

Related: What the bond rally says about Obama's next four years

But I can tell you what my firm is doing today -- investing. We took some junk bonds off the table and rebalanced into some more small cap index funds.

We already have a ton of REITs. Why? They get no tax preference, so Obama can't screw something up that doesn't have a special deal in the first place.

We are already overweight a bit in emerging markets. They appear to be bottomed out, cheap, and a nice compliment to our large U.S. stock holdings.

We still ignore Europe for the same reasons we left almost 3 years ago. I don't need clients asking me why I own such a mess.

So let's be realistic. Half of you are mad that your dude didn't win. Perhaps you should sell everything, since I hear Obama could destroy America. Sell your stock to me. I am just a dumb moderate.

If you don't freak out, I can't trade with an edge.

Lee Munson is the founder and CIO of Portfolio, LLC. The opinions expressed in this commentary are solely his. 

 

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