Farewell to the 2012 Election.

I feel like former president, Dwight D. Eisenhower, the minute after he launched the D-Day invasion — “It’s out of our hands now,” he said, “it’s all up to the men.”

I have left no stone unturned in my analysis of the November 6 election results. The Seven-Eleven coffee cup selection poll, which has correctly called every election since 1996, came out in favor of Obama, 59%-41%. Children choosing Halloween masks opted for the president over the challenger, 63%-37%. The betting site, Intrade, has the incumbent coasting to victory, 68%-32% (click here). Most importantly, in the Family Circle Magazine first ladies bake off, Michelle Obama’s white and dark chocolate chip cookies bested Anne Romney’s M&M cookies by 287 votes with 8,713 cast. It is an outcome that could well end up in the Supreme Court.

So it looks like a slam dunk for Obama on Tuesday. The only question is by how much. I think the map below of the Electoral College outcome is probably accurate in 48 or 49 states — in which case, Obama wins by 290 votes to 248 out of a 538 total. If the president sweeps eight of nine battleground states (excluding North Carolina with 15 votes) — a distinct possibility — he wins by a landslide of 332 to 206 votes … a greater margin than in 2008.

When Romney can’t even get the endorsement of the Salt Lake City Tribune, where he went to college, managed the Olympics, and is ahead in the polls by 58%-42%, you really have to wonder (click here for “Too Many Mitts” ).

Unlike a waffling, noncommittal independent voter, I have solidly put my money where my mouth is, placing the model portfolio for my Trade Alert Service in an aggressive “RISK ON” posture. I am up to my eyeballs with long positions in Apple (AAPL), Google (GOOG), the Russell 200 (IWM), and the S&P 500 (SPY). I have hedged these with short positions in the euro (FXE) and the Japanese yen (FXY), which hit three-month lows on Friday, because a surprise Romney win would deliver an immediately stronger dollar.

My election call is not the only thing inspiring me to roll the dice. Take a look at the chart below of post-election stock market performance since 1928. It shows an average gain for 8% in the two months following every presidential election. That would take the S&P 500 up to 1,533 by January 1. Given that so far in 2012 the market has tracked past pre-election movements almost perfectly, it is a dataset to take seriously.

I have to tell you that I have an unfair advantage in the presidential election stuff because I have been doing this for a really long time. When I was growing up, my dad was a leader of the Republican Party for Southern California. So in 1960, I delivered fliers door-to-door praising the attributes of candidate Richard Nixon. He had been our local congressman, and won his first election by claiming that his opponent, a woman, wore pink underwear.

This was during the fifties communism scare, when any association with the color “pink” was a career killer. I even got to meet president Eisenhower, who came to visit our home near Palm Springs to see our cactus garden, then the largest in the world. By the sixties, a growing family that reached seven children forced dad to retire from politics. We always kidded him that if he had only stuck with the Republican thing he could have ended up in jail with the Watergate conspirators.

A year in the White House Press Corp. during the Reagan administration gave me an insider’s view of how Washington works. Suffice it to say, I needed a long shower afterwards and never went back for more than a visit to the Treasury or the Fed.

There are lessons for all of this in separating out the pre-election hype from the outcome. How can so many otherwise intelligent people be so wrong? People who are normally slaves to data mysteriously department the numbers and start expressing wishful thinking as fact — they suspend their own disbelief. The losing party is also at pains to insist they are winning down to the bitter end to keep the cash flow coming. Warning: try this approach in money management and you will quickly be parted from your hard earned savings.

This is why so many are confused by elections. You have to learn to spot the code words — “Trending better”, “voter enthusiasm” and “media bias” all translate into “losing.” When the inevitable concession speech follows, conspiracy theories suddenly break out by the dozen — all of them equally ridiculous. Remember in 1964 when President Lyndon Johnson supposedly had the absentee ballots from soldiers in Vietnam allegedly flying around in circles?

I am glad this election is finally over. The election has hogged the airwaves to the exclusion of all other information, including economic data updates and analysis. Now that campaigns are no longer spending at a $5 billion annual rate, we can go back to learning something useful. The markets should reflect this.

That said, I’m off to the Barbara Streisand concert in San Jose, CA now, so I’ll let you know how it goes.






Time to do Some Pruning

Comments are closed.