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How Today's Elections Will Impact Wall Street

Senate Park, Washington, DC
Senate Park, Washington, DC

By: Todd M. Schoenberger

For Wall Street traders and Main Street investors, the formula for optimal success for investment portfolios is this: Republican-controlled House; Republican-controlled Senate; Democrat in the White House. R-R-D!

Simply go back to 1940, and the RRD combination has provided investors with an average stock market return of 15.3% per year. For those curious, the DDD combination, which is what we now have, has lifted stocks 5.0% on average. And, all signs point to the S&P 500 doing just that this year.

The one key headline that will come out of today’s election is voter turnout. Emotions have gotten the better of people over the past couple of years, and they’re expected to show elected officials how they feel. Democracy is wonderful, and it’s great to see apathy take a back seat on Election Day 2010.

But ultimately voters want to see progress, and today is a referendum that if a candidate runs on a policy of “change”, then they better come through. Voters were promised change two years ago, and due to an economy and personal balance sheet stuck in quicksand, constituents are pulling a ‘Donald Trump’ and saying you’re fired. The days of coasting on Capitol Hill are long over and lack of production means you’ll soon be on the unemployment line.

The problem is most of the crew being elected today won’t have the political will to influence very much in Washington. It will take years to unwind the socialist damage incurred by the current Administration, which will most likely spell anemic growth until the 2012 campaign.

Some cynics will say this is exactly what President Obama wants, because it will set the foundation for his reelection strategy. And, that strategy begins tomorrow at 2:15pm, ET, when the Federal Reserve announces its QEII program. A jump in GDP for 2011 most likely spells success for the Obama/Biden ticket.

For Wall Street, the immediate future is all about QEII. Remember, those elected today—with the lone exception being the O’Donnell/Coons race—won’t transfer residence to DC until January. Therefore, the markets will run exclusively on the actions of the Fed.

Get out and vote today, and help your portfolio for next year.


Election Day appearances on the Fox News Channel and Fox Business Network have been cancelled, as well as this evening’s spot on Fox 29 Philadelphia.

Todd M. Schoenberger returns to network television tomorrow, Wednesday, November 3rd, on the Fox Business Network. Look for heated debates and discussion on Bulls & Bears at 4:00pm, ET.



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