It has been an interesting first week since the election of Senator Barrack Obama as the 44th President of the United States. The Electoral College map shows 365 votes for Obama/Biden and 162 for McCain/Pailin with Missouri not fully resolved yet. The popular vote went 52.6% for Obaman/Biden (65,974,960) and 46.1% for McCain/Palin (57,775,796). These are all the accounting facts of the election, but not the final tally.

Fiscal Conservatism is still alive and well and needs a new champion.
11/4/2008 Closing at 9,625.28
11/7/2008 Closing at 8,696.03 (bottom at a loss of 929.25)
11/10/2008 Closing at 8,870.54 (loss at the end of the first 5 business days at 754.74)

The Market has been voting on the liberal policies and the tax increase policies of the incoming administration. They have faith in Barrack Obama, faith that he will increase dividend and capital gains taxes by at least 33% from 15 to 20% and the fear is that it may go back up to 28% as it was in the Clinton years.

The thing the market cannot accept is uncertainty and the more uncertainty driven by:

  1. Are business taxes truly going to go up from 35 to 39.6 (13.1%) in a deep recession?
  2. Are Dividend and Capital Gains going to go up 33% from 15% to 20%, or
  3. Are Dividends and Capital gains actually going to increase to 28%
  4. What, exactly, is the Bailout money going to be used for?

The markets are responding to the worst of the uncertainty with caution – Sell. When you sell and you accelerate income from 2009 and future to 2008 to ensure you take the lowest hit on taxes you’re actually being conservative and wise with your money. Contrary to Senator Biden’s view, I do not think paying higher taxes is a patriotic duty. What I do believe is a patriotic duty is to balance the budget by matching as reasonably as possible expenses (hopefully less) to income (hopefully more). Once you make sure that you don’t overspend your income; good things start to happen [such as a more stable and rational free market].

President Elect Obama will soon have to send a clear signal to the markets, is the dividend tax and capital gains tax increase going to take place or not, and if so how much. Once that’s done, the exodus from the market will respond appropriately and then we can start from the true bottom; whatever that bottom turns out to be.

To my fellow conservatives, not the moderates, focus on stability by driving for smaller government, reduced taxes and a return to fiscally conservative principles. Watch, learn and focuse on 2010.

The Lee’s Summit Conservative