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The Day Ahead: The Aftermath

Stocks in this article: GLD

The sights and sounds of an Election Day are like no other. There is the trademarked sound effect before a winner is announced on CNN, designed to build the intrigue. Supporters of the respective candidates emerge in various outlets to keep the faith, only to lose credibility and stamina as the winners are separated from the losers. Then there's that fresh face to the scene, Twitter, which people utilized as a sentiment gauge this time around.

In the end, I am left reflecting deeply on an interesting night. I have learned about human emotions and how people view the political process -- and, sadly, I've witnessed an inability to draw actionable investing conclusions from an event that has been well-documented since the year began. Where was the preparation? In fact, I am flat-out wondering if the would-be average investor is left permanently wearing concrete shoes on the sidelines after years of being burned -- and whether people chilling with their 401ks have any desire to directly enter the stock market. What I'm feeling right now, the day after, is strange: It pertains to the investing process overall, and that indeed extends to my early-inning views regarding the election's outcome.

Early on, a couple of consensus opinions appear to have emerged:

Stock futures rebounded because of Obama Administration continuity: This is a weak explanation to holding or buying stocks. You do not want to be offering cash to bid up price-to-earnings multiples on relief that a lack of change is a good thing. Operate under this logic at your own peril -- the "continuity on" trade will deflate more quickly than a dumped boyfriend's ego.

Stock futures are reserved because of election certainty: This is not as weak a reason to hold or buy stocks. The certainty of knowing who the president is, along with the occupants of the House and Senate, can indeed aid in drawing conclusions on future policy decisions that immediately impact investment decisions.

However, here is the rub: We've heard about business and investor uncertainty for most of 2012, and this has not been vaporized post-election. In fact, uncertainty in the business community may have increased, given our lack of clarity on how President Obama will govern. That feeds in to investor uncertainty. There is no reason to expect a Clinton-esque shift to the center by Obama. (Does he embrace the whole "legacy term" thing? I truly am unsure.) So that leaves full exposure to the damaging effects of the fiscal cliff and, with that, continued cautiousness regarding planning for capital expenditures among businesses. Also, restructuring remains the new norm of doing business in a slow-growth U.S./world.

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