obama stock market crash
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Go Long, Scandal! Keep 'Em Coming, Obama!
There's a lot of buzz that President Obama's current scandals - Benghazi, the IRS and the Department of Justice - may bring down the financial markets.
I disagree - if anything, they'll provide fuel for another leg up.
Scandals Du Jour
The Benghazi scandal is pretty straightforward. Somebody screwed up badly and people got killed by what increasingly looks like a coordinated terrorist attack. Much to the Republicans' frustration, fallout has so far been largely limited to the president and former Secretary of State Hillary Clinton.
The IRS scandal is a little more convoluted, though hardly surprising - at least to me any way. The agency recently acknowledged that it targeted conservative groups for aggressive tax compliance enforcement. Acting Director Steven T. Miller has resigned after being thrown to the wolves by a White House eager to distance itself as quickly as possible from the situation.
And finally, there's what some are calling "AP-gate" in which the Department of Justice was found to have gone after Associated Press journalists' phone records as part of a counter-terrorism investigation.
Never mind that I think reporters ought to be held accountable for national security leaks, what's apparent here is that the investigation potentially compromises press freedom without the express legal authority needed to do so. So much for the White House's assertion that it's the most transparent administration in history; targeting reporters and whistleblowers isn't the way to go.
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The Move that is Costing Investors Big-Time
An interesting study published in Science recently found that people frequently underestimate their future selves. When asked to score their current preferences, values and personality traits compared with how they felt
10 years ago and how they will feel 10 years in the future, people believe they changed more in the past than they will in the future.
It didn't matter whether the participants were teenagers or middle-aged; people just assume that their present selves are "as good as it gets."
Investors have held a similar illusion about the stock market since the financial crisis.With the barrage of negative headlines and abhorrence toward risk, investors seemed to feel that equities would not improve going forward.
This turned out to be a mistaken belief: Take a look at the last four years of U.S. market and gold returns.
