Re: "Fretful Wall Street extends sell-off" (Friday Business Page D4), for the umpteenth time in the past two days I've read that the precipitous drop in the stock market in the days after President Obama's re-election was caused by investors who "turned their focus back to Europe’s problems and the so-called fiscal cliff".
I've got a couple of problems with this conclusion, not the least of which is the glib assertion that investors decided to stop paying attention to matters that affect their money simply because there was an election going on. Secondly, the explanations offered are facile in the extreme. Is there a shred of evidence that Europe's travails and the fiscal cliff are the reasons the market tanked by 434 points in the past two days?
Investors didn't just discover that Europe teeters on the brink, or that America faces the one-two punch of tax increases and spending cuts come Jan. 1st. Markets don't turn on anecdotes, and markets never take a millisecond off from moving money efficiently, which means this information had no additional relevance the day after the elections than it did the day before. Clearly what investors were reacting to was the one indisputable fact at their disposal: President Obama won re-election, and they didn't like it.
Pete Smith
Cypress
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