That may well be the case today. As our gracious host pointed out, there’s a lot of room below 8900. Very possibly, more room.

Take a look at Starbucks: Their profit fell 95%. (How can they lose money selling $4 cups of coffee?) Their stock has gone from a high of about $37 in 2007, to today’s $10. If anybody thinks it’ll get back to $30, this is certainly a terrific time to buy.

Any takers?

How about General Motors? A fairly high-cap stock. $42 about this time last year, $2.90 today. Another terrific buy.

Go back to 1929. How long did it take the Dow to get back to its high? Not till November 1954. Almost 25 years.

So now really is a good time to buy. That’s how Templeton got his start. He bought in 1929 – 1930.

He was patient. And he had a lifetime ahead of him.

Otherwise, I agree with Ridge Runner.

Over time, the extent of political screwups definitely affect markets. The notion that a widely predicted election outcome would make a big impact on market prices on a particular day or week is ludicrous.

The Institute for Supply Management released their October survey this week, and it was a shocker, helping send the Dow down by 10% in two days. It showed much more weakness than expected. That and other economic news was the focus of investor attention, not a bunch of lame politicians playing with themselves and filling the air with another dose of their hot air.

But doing so now would mean selling low after having bought high. We have a name for investors who buy high and sell low: Dumb.

We also have a more accurate name for the practice: cutting one’s losses. We also have a name for the cheap line of reasoning you employed: sunk cost fallacy. If you think your investment is going to lose value in the near future, you should sell it. What you paid for it is irrelevant.

Another possible explanation of stock market activity is that while everyone really should have known on Tuesday that Barack was probably going to win, and that he probably wasn’t going to instantly transform into Mr. Transformative all-around-great guy his supporters would like him to be, impact of a catastrophic event probably happening is not the same as the impact of it definitely happening. Maybe stocks were already depressed enough to reflect that Obama was probably going to win, but retained some residual value reflecting the possibility that they would shoot up in value if he didn’t. It’s the difference between a new lottery ticket (probably $0, but maybe a lot more) and a used one (definitely $0).

We can argue who’s correct but my point is that there are people, lots of people, who believe that the folks who created this problem are being tasked with “fixing” the problem. And it’s a fact that some number of those people are voting with their wallets and moving money out of stocks.

True enough. I would only caution that there is room _below_ Dow8900….there are years of defaulting mortgages in the pipeline….a pipeline of layoffs is building as we type…productive people are deciding whether to bother… stuff like that.

But doing so now would mean selling low after having bought high. We have a name for investors who buy high and sell low: Dumb.

Well, not specifically my argument. It’s Hugh Johnson’s argument.