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The stock market after the election
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Dear Mr. Berko: Our son, who recently completed his doctorate in statistics at UCLA, and his wife enjoy the friendship of a congressman and his wife. We've met this man and he seems like a straight shooter. The congressman told my son the country's financial problems would heal soon after the election. The congressman says neither house wants to commit to any fiscal or monetary changes, tax cuts, changes in regulations or spending reductions until after the election. He says the recently lower 7.9 percent unemployment numbers indicate that after the election, Congress can effectively move to improve the economy and create new jobs. We have $730,000 in several short-term floating rate funds and believe this might be a good time to invest at least half of it in common stocks for a quick six-month turn over in 2013. We would appreciate your opinion. Please do not use the congressman's name, which would embarrass my son and his wife. BW: Waterloo, Iowa Dear BW: Everybody likes a quickie! I'd be surprised if this fellow is a straight shooter. Did you know 99 percent of the members of Congress give the remaining 1 percent a bad name? The surprising 7.9 percent unemployment number shows either the administration's policies are working or unemployment statistics are fungible and can be manipulated. I'd rather the former be correct, but I fear the latter also cam be true. As I've commented often in the past, "the party in power will do everything within its power to make sure the voter is a happy when he visits the polls in November." However, if 18 of the world's largest and most prestigious banks can manipulate the Libor rates (that change daily) for 10 years without getting caught, it's hardly a push to believe a similarly powerful body can nudge a simple unemployment statistic that comes out once a month. Still, this congressman makes an interesting case for a strong market next year. Congress revels in deadlock and won't make important policy changes until it knows which way the wind blows in 2013. Therefore, it's reasonable to expect our do-nothing Congress to be pro-active next year compelling a "rising tide" to goose consumer confidence. I'm not as sanguine as this congressman and doubt a rising tide can create the lift the country needs. Take several deep breaths. The coming years are likely be a market of rising stocks rather than a rising stock market. And the market likely is to be more volatile in the coming years than it has in past years. The three dominant investment concerns after the election are: (1) How can investors protect themselves against hyper-inflation as Congress fidgets to limit the booming national debt? (2) What can investors do to protect their fixed-income investments and bond values against certain-to-come higher interest rates? And (3) how can investors indemnify their portfolios against potentially weak earnings as our GDP begins to sink like it has in Europe and Japan. Plunging in the market after the election is unwise. The economic, political and social changes in the coming decade will be epochal. And I don't know how to quantify the risks because (1) events are changing the shape of the old playing field and (2) a new playing field requires new rules. So, rather than plunge in the market for a quickie and tripping on a land mine, observe and take tiny, short steps until you have sure footing. I'm certain this coming decade will be a challenging and intimidating investment climate for all of us. So rather than going it alone, you should consider employing a seasoned professional to guide you. The coming years are taking us to uncharted territory and the new normal will be "change and uncertainty." That's a lot of money you have there so don't risk it on a quickie when a longer voyage would be safer. Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at mjberko@yahoo.com. 
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Today is Saturday, May 18, the 138th day of 2013. There are 227 days left in the year.
1863 -- 150 years ago: A large variety of children's wagons and gigs have arrived in thecity and are being sold at war prices.
1888 -- 125 years ago: All Rock Island retail houses, with the exception of a clothingstore and a jewelry store, have agreed to early closing hours during the summer months.The store will be closed at 8 p.m.
1913 -- 100 years ago: Baseball enthusiasts in Rock Island are attempting to raise$20,000 to keep the Island City Park open, despite the fact that the city has no franchise inorganized baseball this year.
1938 -- 75 years ago: The organization of a third rural young people's unit will beundertaken tomorrow night at the Milan Presbyterian Church, with Mrs. Mildred K.Wellman, home advisor, and Robert Smith, county farm adviser in charge.
1963 -- 50 years ago: Deere & Co. will begin a "big switch" on its telephone systemMonday morning. The extension numbers of all 1,600 telephones on the firm's EastMoline and Moline exchanges will be changed Monday morning.
1988 -- 25 years ago: East Moline's June Jamboree VI -- Nostalgia Days, will seemlike a '60s revival with the appearance of stars like Bobby Vee, Freddie Cannon, PeterNoone, Turtles, The Grass Roots and Lou Christie. This year's festival has beenexpanded to five days, June 22-26, at the Northeast Park complex.
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