Look What Happened to the Economy While You Were Voting
Everyone's talking about what's going to happen to the markets after the election. Obama won, and some think it's bad for the stock market. Based on the reaction of stocks since election day, they may be right. Or, wait, maybe it's fear of the U.S. falling off the "fiscal cliff" that's pushing the market down?
Short-term price action isn't always the best indicator of what the future holds. It's the big picture that really counts. John Hussman's latest commentary pulls no punches when it comes to the big picture. The U.S. entered a recession last quarter.
He wrote this before the election and his comments don't take the fiscal cliff issue into account.
But what about recent "good news" like lower unemployment, recent gains in consumer confidence, consumer spending rising, home sales up in September? Hussman brushes these off as irrelevant. He thinks that prominent data points such as GDP and non-farm payrolls will be revised downward within several quarters, consistent with what has occurred historically around economic turning points.
For example, May through August 1990, the Bureau of Labor Statistics, reported a gain of 480,000 jobs only to have that number revised to a loss of 81,000. More recently, early in 2008 even though the U.S. was already in recession, first quarter GDP was announced at +1%, but was later revised to -1.8%.
Hussman expects downward revisions in coming months to demonstrate that a recession began in the third quarter of 2012.
So all those people prattling on about what the market was going to do if Obama won, or Romney won were basically focused on the wrong question. While they were speculating, and while we were all voting for one or the other candidate, the economy had already made up its mind - at least according to Hussman.
Whether Hussman turns out to be right or not, we can learn from his commentary. Stop focusing on the numbers that the media - especially the financial media - spits out on a regular basis, most of which become fuel for the cheerleaders you see on the financial news outlets. Learn to take a longer view. Find good sources like Hussman to get a better grasp on how to see the bigger, ultimately more important trends, that will make a difference in your life.
Short-term price action isn't always the best indicator of what the future holds. It's the big picture that really counts. John Hussman's latest commentary pulls no punches when it comes to the big picture. The U.S. entered a recession last quarter.
He wrote this before the election and his comments don't take the fiscal cliff issue into account.
But what about recent "good news" like lower unemployment, recent gains in consumer confidence, consumer spending rising, home sales up in September? Hussman brushes these off as irrelevant. He thinks that prominent data points such as GDP and non-farm payrolls will be revised downward within several quarters, consistent with what has occurred historically around economic turning points.
For example, May through August 1990, the Bureau of Labor Statistics, reported a gain of 480,000 jobs only to have that number revised to a loss of 81,000. More recently, early in 2008 even though the U.S. was already in recession, first quarter GDP was announced at +1%, but was later revised to -1.8%.
Hussman expects downward revisions in coming months to demonstrate that a recession began in the third quarter of 2012.
So all those people prattling on about what the market was going to do if Obama won, or Romney won were basically focused on the wrong question. While they were speculating, and while we were all voting for one or the other candidate, the economy had already made up its mind - at least according to Hussman.
Whether Hussman turns out to be right or not, we can learn from his commentary. Stop focusing on the numbers that the media - especially the financial media - spits out on a regular basis, most of which become fuel for the cheerleaders you see on the financial news outlets. Learn to take a longer view. Find good sources like Hussman to get a better grasp on how to see the bigger, ultimately more important trends, that will make a difference in your life.
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