Regardless of which side of the political, economic or picket fence you are on, there is one thing about which we can all agree: A historic election is over, the country has spoken and now it is time for the winning team to see if they can put some points up on the economic scoreboard.
Barack Obama won the presidency on a theme of continuing the change he began four years ago. I wish him luck. Personally, I am not sure why anyone of sound mind would want the job. They say a new broom sweeps clean, but it is going to take a lot more than a new broom, or in this case a revitalized broom, to get this economy fully functional and at the same time keep a collar on Wall Street.
However, there is one thing you can count on - while the sheriff in town remains the same, the ground rules for corporate America and Wall Street are going to have to change radically. We face a looming budget crisis and a continuing disconnect over how Washington and Wall Street view each other. Therefore, the end game could result in pain for everyone but especially the financial markets.
It is certainly no secret that at the beginning of 2013, a $600 billion combination of tax increases and spending cuts - affectionately known as the fiscal cliff - will automatically become law unless Congress acts quickly and decisively. Indecision and inaction will send a hard punch to the solar plexus of Wall Street.
What is most discouraging is that neither Wall Street nor Congress appears to be taking each other seriously. Many in Washington believe Congress could do nothing and Wall Street's reaction would still be relatively sanguine.
Not so - Wall Street has coalesced around the view that with the election being over, Congress will reach at least a short-term deal to avert the cliff. In short, that Congress will at a minimum kick the can down the road for several months. A failure by Congress to reach a solution invites a Wall Street implosion.
Wall Street and Washington have misread each other in the past with near calamitous results.
One of the ugliest moments occurred in September 2008, not two weeks after Lehman Brothers collapsed. Back then the House rejected a $700 billion financial bailout plan. As result, the financial markets unraveled, creating a shock wave powerful enough to galvanize lawmakers into passing a revised plan a few days later. The need to tempt disaster before a degree of sanity emerges escapes rational thinking.
With regard to your portfolio in the coming months, keep in mind that while change brings opportunity, do not become so overly enamored with trying to capitalize on incipient trends that you lose sight of your original investment objective, which is to find proven companies that have a high probability of producing capital gains and dividend growth over the next several years.
Keep in mind what Mr. Obama said in his recent acceptance speech, "We are the global leader in technology and discovery and innovation, with all the good jobs and new businesses that follow ... furthermore, progress will come in fits and starts. It's not always a straight line. It's not always a smooth path." So it is with Wall Street.
Lauren Rudd is a financial writer and columnist. You can write to him at LVERudd@aol.com.