After the 2008 presidential elections, my hedgie friends on the right side of the aisle issued stern warnings. They informed me that President Barack Obama was a Muslim/Kenyan/socialist. He was going to destroy markets. On March 6, 2009, Michael Boskin warned in a Wall Street Journal column that “Obama's Radicalism Is Killing the Dow.”
The ideological argument ignored a number of important facts, including the passage of a stimulus of almost $1 trillion and the change in accounting rule FASB 157, which allowed banks to deal with bad assets on their balance sheets much more easily. The Federal Open Market Committee announced a Zero Interest Policy and contemplated Quantitative Easing. This was in an environment of extremely oversold markets.
Boskin’s column was -- literally -- published on the day the market reached its bottom. The Standard & Poor's 500 Index tripled, the Dow Jones Industrial Average rallied 10,000 points and I still doubt anyone learned the lesson about mixing politics and investing.
The very first article I published in Washington was the simple admonition that politics and investing don't mix. In an election year, we need extra reminding that this is true.