America's future of potential financial calamity took on a new form last night with the victory of incumbent President Barack Obama over former Massachusetts Governor Mitt Romney. Though there are still some votes to be counted, it appears that the president came close to matching his definitive win in 2008. His supporters, predictably, have been in a state of euphoric celebration since Romney's late-night concession speech while Republicans are reeling from the loss. But what about the other major participant in our nation's political process, the market?
This morning, some investors made it clear how they felt about the election results. As of the late-day trading period, the S&P 500 index had shed nearly 2 percent of its value while the Dow Jones Industrial Average tumbled more than 300 points, bringing it below the 13,000-point level.
However, it may be premature to pin the blame squarely on President Obama's win. According to a report from Reuters, some in the industry think that market participants had bought shares and options expecting a Romney victory. With that possibility extinguished, today could simply be an exercise in economic housecleaning.
On the other hand, continued fears over the resolution of budget cuts and tax raises at the year's end, known by many as the fiscal cliff, may also have driven today's drop. The fact that the makeup of the next Congress is largely the same, in addition to the president's re-election, means that the conditions for gridlock remain unchanged. While the momentum is certainly with the Democrats, there's no way of telling how the negotiations will ultimately play out.
The next few trading days could give investors a better picture of how the stock market intends to react in the wake of the presidential election. Due to the risk of continued volatility as the fiscal cliff approaches, entrepreneurs may want to think about cash flow real estate as a strategy to avoid fluctuations in the country's major investment indexes. Those looking to bring stability to their portfolios should visit GreatWealthStrategies.com today to receive their own "Free Game Plan Report."