I was expecting stocks to rally sharply ahead of the election, and pull back when the results were announced. It looks like that prediction came true.
I based my prediction on the conspiracy theory that the market is controlled by a relatively small group of ultra rich people who preferred McCain for president. A phony surge in stocks ahead of the election might have convinced some people that the economic downturn was already on the mend, so no need for a change.
I have long suspected that all major movements in the markets are manipulated by billionaires who would like to become trillionaires. They know in advance which way the market will move, because they cause the movement, so they sell high and buy low while the unwashed masses are doing the opposite.
If you based your investing on the conspiracy theory that markets are manipulated by the rich, you would do very well, even if that theory is wrong. For example, you would have bought stocks every time the media told you the economy was doomed, and sold stocks whenever the market was testing new bubble highs, because you cynically believed all financial news was intentionally misleading.
Unfortunately it’s psychologically hard to buy stocks when the economy is circling the drain (according to the media) and even harder to avoid investing when things look bubble-iscous. The way to get past that is to convince yourself the billionaires are manipulating all information about the economy in order to fool you. When the media says sell, it’s time to buy. (Disclaimer: Do not get your investment advice from cartoonists.)