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Embracing Obama: Market Warms Up as Election Nears

Posted Oct 31, 2008 07:00am EDT by Aaron Task in Investing, Newsmakers

Conventional wisdom is that a President Barack Obama will be bad for the stock market. Some even attribute the market's recent weakness to fear of an Obama victory, specifically citing his plans to raise taxes on capital gains and on incomes above $250,000.

A contrarian by nature and self-described Obama supporter, Whitney Tilson, managing partner of hedge fund T2 Partners, is taking the other side of the trade.

Tilson believes a post-election rally of roughly 10% is likely, regardless of whether Obama or Sen. McCain wins. He compared the U.S. to a struggling company that hires a new CEO, who typically enjoys a honeymoon period -- at least initially.

The fund manager further notes the market has climbed sharply so far this week as polls show an increased likelihood of an Obama victory.

"People are starting to look forward to what may be an Obama victory," Tilson says. "Even his critics say he's a smart, rational guy who's assembled a good team of advisers."

But what about the negatives of higher taxes, which previous guests like GOP Congressman Thaddeus McCotter (R-Mich.) say will be ruinous in a weak economy?

Tilson's response is to note that Obama intends to cut taxes for over 90% of American families. Still, the fund manager concedes the "robustness and timing" of many Obama priorities will be hampered by the cost of bailing out the financial sector. But that's true for both candidates.

342 Comments

CHARLES
CHARLES - Friday October 31, 2008 07:33AM EDT

go obama

Robert
Robert - Friday October 31, 2008 07:48AM EDT

he must be kidding me

Emilio
Emilio - Friday October 31, 2008 07:50AM EDT

We need Obama to wake up our economy!

Mack
Mack - Friday October 31, 2008 08:00AM EDT

Obama's detractors will secretely be glad that he is the next president. They know that his plans make more sense. The problem with McCain's trickle down economics is that the opportunity and financial gains typically don't trickle down. Some low-paying jobs may trickle down but the real opportunity stays with the wealthy and powerful. Obama's plans are designed to empower all of America.

Yahoo! Finance User
Yahoo! Finance User - Friday October 31, 2008 08:03AM EDT

There was absolutely ZERO facts in that. Why do I care what this guy (an admitted Obama suporter) thinks the market is going to do when Obama wins. This is the ridiculous TechTicker type video that makes people hate this website.

Noodlerr
Noodlerr - Friday October 31, 2008 08:03AM EDT

All I want to know is when do the Jail Sentences start getting handed out for ALL the Fraud.

MartinG
MartinG - Friday October 31, 2008 08:05AM EDT

people will just say and theorize anything to get their 5 minutes of fame. The market is warming up to Obama's victory. Let's assume that even the most optimistic poll which has obama 10% ahead of mccain is true, we could also assume that investorswise, the ratio is the same. So this guy is telling me that these 10% of 'investors' make such a huge difference in the market that they would be moving the market 900, 200 etc points. PLS!!!!!!!!!Get a grip on reality. So why is market down 40%? Because it thought all the way that mccain would win? Obama has been leading in the polls since day 1 (except a brief period after the convention. So Mr. Tilson, just be objective and tell us what agenda do you have. Just tell what is your portfolio performance, instead of telling us of your political preferences and biased objectivity.

Fred
Fred - Friday October 31, 2008 08:06AM EDT

Nothing can be as disasterous to our economy as the Republicans have been over the past 8 years. Finally there is a light at the end of the very long tunnel with Obama.

DAVID B
DAVID B - Friday October 31, 2008 08:08AM EDT

As a CFO and CPA my opinion is OBama would be a disaster just as Jimmy Carter was. America Wake up Vote McCain

francis
francis - Friday October 31, 2008 08:10AM EDT

this story is a joke and in typicla liberal media a very misleading headline. to suggest that the market is up this week because of Obama shows what an idiot this guy is

Clyde
Clyde - Friday October 31, 2008 08:11AM EDT

If Obama is so good for the economy, why are the 4th Qtr numbers not looking so good.......those numbers are what is currently happening today in our economy. Also, what about the 401k, SEP and other retirement vehicles his (if elected) administration wants to negate so the administration can have the tax money to support his radical ideas. Nothing like screwing the working class to "redistribute the wealth". I'm a business owner...I got off my but and worked for it!!!! Took the risks..Come on.....look past the pretty face. Look at the facts.....

Aaacc
Aaacc - Friday October 31, 2008 08:12AM EDT

Dear Sirs, I hope to receive clear information concerning a problem: Is it true, that J.W.Bush is an American spy? Please send me a direct link regarding to this Q. Hope to hear from you soon.

Noodlerr
Noodlerr - Friday October 31, 2008 08:13AM EDT

Horse dodo... the market has bounced because there are bargains to be had in stocks.. has nothing to do with this Obbbbbaaaaahmmmmaaaa Craze...

Bradley
Bradley - Friday October 31, 2008 08:13AM EDT

What's happened to America? Things must be pretty bad when people are voting for a guy that speaks with many words and says NOTHING. At least I'll know, Sen. Mc Cain will put our country first. GOD BLESS AMERICA

Aaacc
Aaacc - Friday October 31, 2008 08:14AM EDT

Vote for freedom!

Yahoo! Finance User
Yahoo! Finance User - Friday October 31, 2008 08:17AM EDT

Dear Sirs, I hope to receive clear information concerning a problem: Is it true, that J.W.Bush is an American spy? Please send me a direct link regarding to this Q. Hope to hear from you soon. Ann.

Ed NC
Ed NC - Friday October 31, 2008 08:17AM EDT

Tilson is managing partner of WHAT? Check it out. The IRS (2006 latest info) says that Obama's tax increases will affect 66% of small businesses - not "just a few" as he says. Small business ( including Subchapter S and LLP's reported $706b, with 66% reporting income of $250k or more. These businesses are, right now, already planning not to add employees next year - and in fact cut employees - if Obama is elected. Biden is right - we will see an "International crisis" of jobs leaving this country within 6-months of Obama being elected.

Mack
Mack - Friday October 31, 2008 08:18AM EDT

southern007, you may be a CFO and a CPA but your opinion is no more valid than any other. There were a lot of CFOs and CPAs on Wall Street who were responsible for this crisis. By the way, I am a CPA, MBA and PhD.

DAVID B
DAVID B - Friday October 31, 2008 08:21AM EDT

Vote for the Flag and the Libery Bell. Vote McCain

Yahoo! Finance User
Yahoo! Finance User - Friday October 31, 2008 08:24AM EDT

So many people think Obama can fix everything...But the fact is no one can fix the current economy! Obama will make thing worse by changing this country to socialism. Wake up American !

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