November 4 Election Day

In the last two days we have gone back into the stock market after two years with our 401’s completely out. Our advisor at Goldman Sachs said he believed even if Obama were elected, the market would rise after the election until the inauguration. Our advisor at Mellon said they were fully invested last week.

The market had had already discounted the election. When the market discounts bad news the market drops and then when the news occurs the market actually rises if the news is not as bad as expected.

Until a few months ago all economists and responsible people (such as McCain) refrained from using the "D" word (for economic "Depression") as they tried to avoid financial panic. This is consistent with FDR’s advice during the Great Depression. During the Great Depression FDR gave us the expression, "The only thing we have to fear is fear itself". From that time on no one used the "Depression" word as it was considered similar to shouting "FIRE" in a crowed nightclub. People did not use the "D" word until Obama and his media following picked up on it. And as soon as they began talking about how bad the economy was, the fear FDR warned about resulted in banks fearing to loan money.

But we have not had two quarters with the GDP down so technically we are not even in a recession yet. So Obama has positioned himself to be an economic miracle worker. Obama will get credit for averting his imaginary depression by saying astute things that give investors hope. The economy is already awash with cash and the stock market is a bargain since it already discounted Obama's imaginary economic depression.

I am seeing evidence (3 out of 4 indicators) that we have passed the stock market bottom for now. Cash is flowing back into investments again. The strong dollar at this time has made foreign investment an even greater bargain. If the Europeans do not slash their rates soon the dollar will likely decline again and beaten down emerging markets should rise just due to the dollar decline let alone due to their recovery from being down about 50% to70% from their highs.

Now is the time to be invested globally because they are down the most due to Obama’s imaginary economic depression and have the most to recover over the next 60 to 90 days. We can expect the Asian markets to rise rapidly now as fears of a depression subside. USA markets should also rise too for at least two or three months. By then we should have a better idea how long the recession will last.

Buy in the pull-back of a double bottom. Of great importance is the need for the EU to also lower their rates so as not to cause currency problems and to make sure the recession subsides. Currently the EU is not even contemplating the "D" word.