He Hopes It Will Change
Profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you’ve got a long-term perspective on it.”
Sage advice from a Wall Street market strategist?
Hardly.
That was direct from the mouth of President Barack Obama.
Traditionally, presidents don’t comment on the markets. They know it’s a path that usually leads to no good. Presidents are not stock pickers. And their words can move markets. Indeed, stocks recovered somewhat from a midday slump after Mr. Obama made the comment, in a media availability with British Prime Minister Gordon Brown.
Yet, given the market selloff over the past several months, might it not be a good idea to cheerlead stocks? Don’t extraordinary times call for throwing out the rulebook?
Here’s why the answer is no. The President needs to stay out of the markets for the markets to operate efficiently. Even at a time when it seems the government is as inolved in stocks as it has ever been, it’s still a bad idea for the head of the nation to guide people in how to save or invest their money. People respect the office, and follow the advice, and the president should not have the responsibility to guide private citizens’ nest eggs. It is beneath the Office of the President.
Plus, he could well be wrong.
Look at it this way: There were plenty of folks who pull down paychecks who called the bottom in the fall. And in December. And in January. And now.
In fact, looking at P/E ratios to guide overall market valuation is more of an art than a science. Some see an oversold market now. Others still see more selling yet to come. And market history has shown us that we can go through long periods where stocks barely move at all.
One last point: For all his appeal, charm, charisma and success, President Obama doesn’t do the stock market for a living. If he did, he would be as hesitant as everyone else to recommend someone increase their stock allocations.
After all, many of those who offered that advice over the past year are now out of jobs.
Now that’s a problem worthy of the president’s time and attention.
The Messiah will raise his hands to the heavens and bring salvation from these troubled times in the market! E.F. Hutton said it now you gotta believe it!
No It Won't Regards
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Originally Posted by R Little
