Obama Election Watch

For a century or more, many American voters have been influenced, if not controlled, by a deep-seated myth that the election of a Democrat is bad news for the stock market.

Once again the myth is being used to political advantage. The U.S. stock market has declined precipitously. Since October 2007, the Dow Jones Industrial Average has plummeted by 20 percent or more.

This opens up a superb opportunity for the GOP to bring old ghosts out of the closet.

McCain swiftboaters are making two charges:

• They charge that the decline in the market is due to national polling results showing that Obama is likely to be the next president.

• They say, too, that the election of Obama will inevitably produce a further sharp decline in stock markets after he is in the White House.

But both statements are false.

The current bear stock market decline has its origins in the Bush presidency. It began last October, long before anyone had the faintest dream that Obama might either be nominated or elected president.

Most important, statistics show that stock markets have a life that is largely independent of politics. On average the stock market actually has done slightly better under Democratic presidents than under GOP administrations.

Nonetheless, GOP swiftboaters know that blaming the stock market decline on Obama can be employed to terrorize as many as 65 million voters who have savings invested in stocks or stock mutual funds. Millions more Americans have large ownership positions in retirement accounts, pensions, and savings plans that are heavily invested in stocks.

People will vote their pocketbooks, especially when a financial threat is perceived to be severe. Once the myth is accepted that a Democrat in the White House will cause further declines in the stock market, untold numbers of Obama voters or political fence sitters are likely to shift to McCain.

What can Obama do to set the record straight and assure voters that their investments will be safe under an Obama presidency? One point is that Obama enjoys widespread support on Wall Street. Data from the Center for Responsive Politics shows that Obama has raised $9.5 million from employees of Wall Street firms compared to $5.3 million for McCain.

Consider the following:

• Investment professionals at Goldman Sachs are widely viewed as the smartest people on Wall Street. There are 141 employees of the firm who have donated the maximum of $2,300 to the Obama campaign.

• More than 50 executives at Morgan Stanley are Obama supporters. Each gave the maximum permited under election law.

Clearly, many successful and highly experienced Wall Street professionals, people of considerable financial prowess, are enthusiastic about the prospects of an Obama presidency.

It is important that the Obama campaign erase the myth that an Obama presidency will harm the stock market. The best weapon will be solid assurances from financial professionals and respected money managers. Endorsement of Obama by the nation’s financial wizards will calm the fears of those who have fallen victim to the swiftboaters’ myth.