It was clear on Wednesday after the election that Wall Street picked the wrong candidate to win the 2012 presidential election. They had banked on a Romney win which would have meant austerity measures, spending controls, targeted tax cuts, and economic growth. After Mitt Romney’s surprise loss rippled through markets throughout the week following the election, the Dow had lost billions in value. Companies announced massive layoffs in anticipation of Obamacare becoming the law of the land, along with tax increases on both wages and dividend earnings. With Europe already slipping back into a recession and the US posting sluggish growth at best over the past few years, the markets seem to be smart to be factoring in a possible double-dip recession here in the United States. Goldmen Sachs reported yesterday that they are now warning their clients that their portfolios could lose another 8% of value before the end of the year. With the fiscal cliff looming, and President Obama intent on increasing taxes on the wealthy — it looks very probably that the US economy will face a major slowdown in 2013, and huge job losses.
Where should you invest going forward? If you have a lot of time left before retirement, you may be able to continue dollar cost averaging into your 401k through the end of the Obama administration. When you consider the economic damage he is doing, and the perpetual bad news coming out of Washington these days, it’s easy to bet that you are getting to buy stocks at a true bargain right now. The Democrats should work to set up Republicans with an easy home run in four years if their economic policies fail as predicted, therefore if you are able to pad your portfolio now — You should be able to expect big gains throughout the next decade as the economy makes a comeback under a future Republican administration and/or congress. Think about the Reagan era, and how the longest period of peacetime economic growth was born out of recovery from the Jimmy Carter era.