May 3, 2010
Anger Clouds Financial Judgement
The S&P 500 has risen 42.5% since Obama took office, propelled upward in part by a $787 billion stimulus program and a bailout of Wall Street, and stock prices remain attractive relative to earnings growth forecasts. But a March 2010 Bloomberg national poll found that Americans believe the economy has gotten worse, by "an almost 2-to-1 margin" since March 2009. Yet facts are stubborn things and all that anger may be keeping politically disgruntled investors out of stocks at a time when rejoining the market could help them replenish retirement funds decimated by the S&P 500's 40% fall between its October 2007 peak and January 2009.
There may be many reasons for the mismatch between the public mood and the state of the economy and the markets. One might be that a group of politicians is hoping to channel the public's rage over the financial crisis against the administration that appears to be cleaning it up. In so doing, they may be hoping to regain the political power they lost after pushing the policies that caused that financial crisis. Another reason could be more benign: Employment takes a long time to pick up after a recession ends, and until the job market comes back strong, the public stays in a bad mood.
See full article from DailyFinance: http://srph.it/cUA997