Finally Here

It has been an exhausting two-year campaign and today it will finally end. Two months ago, before the financial system nearly collapsed, the race felt different. We were all concerned about taxes and the economy, but there were other issues as well. Today the polls tell us what we already know: it’s the economy stupid!

Last week underscored the main issues that voters are confronting: the US economy finally went negative in terms of GDP and is likely to get worse, the housing market continued to contract and the stock market closed out a horrible month (October was the worst month for the Dow since August, 1998 and the worst month for the S&P 500 since October, 1987 -- yes, the October of the 22% one-day crash).

During the month, there were panic-driven sell-offs amid fears of a total systemic melt-down. The stomach-churning gyrations pushed stock indexes in massive swaths from day to day as the collapse of investment grade financial companies triggered a run on the financial system. In normal times, swings of more than 4% in a day are rare (there were 3 such days throughout the 1950’s, 2 in the 1960’s and none from 2003-2007), but in the month of October alone, there were nine. Until last month, September, 1932 held the record for the most days with big moves at eight.

And so the voting public starts today knowing that stock prices are at higher levels than the October lows, but they are not likely in a better frame of mind when it comes to considering the global economy. Many have already made up their minds as to which candidate is better equipped to navigate these treacherous times, but even to those, there is an understanding that we have never been here before.

The Wall Street Journal noted yesterday that there “are two relatively recent historical precedents for the current election, where a new president will take office amid a serious financial crisis. Whether John McCain or Barack Obama is elected, he will confront ugly economic challenges like Franklin D. Roosevelt did after his 1932 victory and Ronald Reagan did in 1980… the market posted big gains during their overall tenures, though it is unclear whether the main cause was their policies or the steep declines the market suffered before they took office.”

And that’s probably the most confounding issue for any voter: we can’t truly know which candidate will be better, or lucky or unlucky. The best we can do is gather the information and make the most informed decision possible when we enter the voting booth. Of course no matter what, the darned thing will be over and we can get back to obsessing about our investment accounts or future economic data. Yes, it is finally here.