Some advisors will tell you
the U.S. President and Congress modify policies that are friendlier to
the economy to get reelected. All politicians know that people vote their pocket book.
The theory holds that during the first two years of office, the
president pushes socialistic policies. In the last two years of
the first presidential term, the president favors capitalistic views so he or
she can be reelected.
Now here is the truth. Politicians have
absolutely nothing to do with positive economies. Their only possible impact
to the economy is a negative influence. Politicians did not create Ford Motor
Company or invent the light bulb. Those two events in the early part of
this century propelled the economy to unprecedented heights. Two hard
working Americans started that work and many more joined in to help. Not
one politician burned midnight oil helping.
Politicians supported isolationism in the early part of this century and
their behavior introduced the Great Depression. After creating the Great
Depression, politicians introduced social program after social program
that led to over twenty years of stagnant stock market behavior and a
reduced quality of life for all Americans. Our hard working productivity
has finally caught up with their sinful ways. Hard working Americans
and people around the world are still ahead of the curve, but rest
assured we can fall behind the political curve, especially, in these
times of threatened terrorism. Politicians may not be able to resist
their innate desire to control every moment of our lives. If they
progress in that direction, expect bearish behavior.
Unfortunately, American politicians are needed.
Other
countries have had them. And some are evil, such as Adolph Hitler, Saddam
Hussein, and others. So we need
our evil to combat the evil of others. It is important to recognize the
relationship and keep politicians informed of their primary duty and
hold them at bay with their true desires. There are good and honest
politicians who simply prefer public life. But they remain in the
minority.
Perceptions overrule reality. Sure,
politicians can shift meaningful policies favorable to the economy. But
such changes are from their prior unfavorable positions. Whether or not
this really happens, the market apparently believes there is a
connection as indicated by the above charts.
As stated at
this time one year ago, you can expect the markets to rise from the bottom
of 2002. The markets indeed found bottom in 2002 and rose solidly to the
north in 2003. Expect more of the same in 2004. The
various indicant models will guide you through in the event historical
normalcy loses its influence.
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