I’ve posted Entry #117 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Market Crash Inevitable, Regardless of Who Wins Elections.
Juicy Excerpt: What if it is Obama that wins? Then the other half of the population gives up its illusions! The Romney people have been feeling mighty discouraged during the past four years. They get through each day by telling themselves that Obama won’t be reelected, that Romney will be coming in soon. An Barack Obama win would make this half of the population feel as bad about the future as the Obama supporters will feel in response to a Romney win.
It gets worse.
You might think that the saving grace from a hope perspective if Barack Obama wins is that the Barack Obama voters will feel renewed hope. They will. For a time. But if the theory behind the Valuation-Informed Indexing model is on the mark, it is not economic conditions that are causing our troubles — it is the largely ignored reality that we borrowed $12 trillion from future investors to pay for the bull markets of the late 1990s and that we now need to pay that money back. Obama’s policies cannot make up for the $12 trillion in lost wealth we caused by letting the bull market get so out of hand. So the hopes of the Obama supporters that Barack Obama will turn things around in a second turn will not be vindicated.
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