HOW THE NOVEMBER ELECTIONS AFFECT THE STOCK MARKET
People who buy stocks take a lot into consideration and one of those things is the economic and financial climate at the time they are interested in buying. Right now there is an event that is less than two months away that will have an effect on how people perceive the future and how willing they are to part with their money to buy stocks. That event is the November midterm elections.
Historically, investors have viewed Republicans as more friendly to business and the stock market. The main reason for this is because they want to lower taxes or keep them the same while Democrats always want to raise taxes. Taxes are bad for company profits and for business in general and so investors would rather have Republicans in charge in the hope that they would be more inclined to keep taxes down.
Remember, one of the main catalysts of a stock going up or down is how much profit a company makes. With higher taxes, profits go down and so often do stock prices. Right now, Democrats control the Presidency and both houses of congress. They have been spending money and giving away money (our tax dollars) like never before in our countries history. Unemployment is high, spirits are low, and the country is at an all time record for being in debt.
All these bad things have probably kept many stock investors on the sidelines because they want to have a clearer picture of what the future might be like. I know because I am one of them. Will things continue to get worse or will it somehow miraculously be turned around? I don’t want to be buying stocks if things are going to get even worse!
All the predictions are that the November election of 2010 will see Republicans make great gains in both the Senate and the House. Just how big those gains will be is the only question that no one can answer. However, any gains by Republicans should be good for the market and if they happen to win a majority in either side, investors might get even more excited. If investors know that Republicans have the ability to block some of this out of control spending by the Democrats, they might get a little more confident in the future and be more willing to invest.
We are going to have 2 more years of President Obama and he will continue to try to pass legislation that is anti business. There is no doubt about that but if people feel there is a little more balance to the government, they might be more inclined to buy stocks. If Republicans do get elected and start to block some of this out of control government spending, companies might feel better and start hiring as well. It will be a slow turn around if we get one at all but the November midterm elections are an important one for business and our economy.
