Obama And Stock Expectation « Power And Dollar

Obama And Stock Expectation

Economy is the top concern for voters. In theory, Democrat contender should have an easy win. However, poll shows Obama has only a small margin. Is race really the open question? Since this race is about Obama vs. anti-Obama, let’s check if Obama’s fiscal policy is giving any hint about his performance.

Considering seniors constitute the biggest voting block, attention should be placed around this block’s interests.

The flagship item of Obama’s fiscal policy toward seniors is the elimination of income tax among seniors of income less than $50,000. However, a good portion of seniors’ income, in addition to Social Security, originates from pension funds, individual investment or through downsizing their real estate since most of them generate very little income tax.

Obama, at the same time, wants to increase capital gain tax from 15% to 28%. This impacts seniors’ income. How will this off set Obama’s first $50,000 tax free income for seniors? No one has the figures yet. However, let’s see how much hard that will make for the seniors’ stocks (pension plan, IRA, 401k…).

If the stock is expected to generate 10% after tax growth with 15% capital gain, the stock value has to grow 11.76%. This is computed by 10% / (1 – 15%). If the capital gain tax rate is raised to 28%, then the stocks have to grow at 13.89%. Don’t think the difference is only 2.23%. Think how much harder the companies have to work in order to generate this 2.23% extra growth: (13.89% – 11.76%) / 11.76% = 18.06%! Companies have to work 18% harder to find the growth investors (in this case, seniors) are expecting / dependent on.

If the seniors are not checking these numbers, fund managers certainly are. This bit of information probably does not change every voter’s mind. It certain would help prioritize which stock sits in the parking lot for a while and which queues in the drop list.

August 6, 2008 - Posted by royho | Barack Obama, Current Events, Democrats, Election 2008, Investment, John McCain, Money, Republican, economics, election, market, mccain, obama, opinion, politics, stock, wordpress-political-blogs, 美國 | | 10 Comments

10 Comments »

Good post. Also compile on top that higher capital gains tax disincentivizes investment and shifts it to other markets that welcome the money freely, then the problems compound even further. But at least we’ll have “equality in taxes”.

Comment by Ric | August 6, 2008 | Reply
Hopefully Race doesn’t cause him to lose. If that’s so, America will get what they deserve.

Comment by kylelmeade | August 6, 2008 | Reply
I can’t believe how many people still buy this polling crap. We know they don’t work, but yet we choose to misrecognize that they don’t work. In the end, unless Bob Barr or Ralph Nader pull off a miracle, it is essentially a 50/50 chance between Mccain and Obama, which I think accurately reflects the degree of polarity in this country right now. So polls mean nothing. People want to equate polls to scores of a baseball game of who is winning and who has the potential to win. It’s not the same thing, so don’t confuse them. There are many contigent factors that could arise by the time people actually put puncher to punch card ballot. So basically, all of the talk about polls up to this point would be hypothetical baseless rhetoric. But you will always get those idiots who claim – I told ya so! When there is no way to scientifically validate all of the possible contingencies that create a new President.
I still think that it is a huge uphill battle for Obama to overcome the incumbent powers that currently have the next presidency rigged, so we miight see a huge upset/civil war break out. Call me a pessimist, or a visionary.

Comment by Daniel | August 6, 2008 | Reply
To see that people rely on polls so much – to see that polls are consistently in the news so much, it just goes to show me that this nation if full of stupid people.
That means – stupid voters, which means – people who are deliberately mislead to essentially guess whom they should choose in an amazingly convoluted system that intentionally tries to keep people questioning themselves by the time its too late when voting comes around. Somehow by the end of all the chaos and fallout, we will have a president.

Comment by Daniel | August 6, 2008 | Reply
This poll of CNN’s is completely bogus!! CNN’S coverage and lack of factual information is a farce. No factual, truthful or ethical reporting!

Why are you not sampling BLUE STATES with the RED STATES in conducting these polls? The only polling you are doing and gathering your sources are from RED STATES where Obama is doing a great job of making inroads on McCain’s base!

That’s the real story – not this crap you are feeding America into believing that this is a close race! It is not – Obama beats McCain by over 100 electoral votes (which is what counts by the way – not polls and no longer delegates)!!!! Write a piece and do a story on that – forget the polls that are skewed by MAINSTREAM MEDIA AND CNN!

The BIGGER STORY is why isn’t/hasn’t McCain made any inroads into any of the blue states, whereas Obama has being making SIGNIFICANT inroads with the red states?!! Where is this story?

How disgraceful

Comment by Kimberly | August 6, 2008 | Reply
401(k) distributions are taxed as income, not capital gains.

Comment by Izak | August 6, 2008 | Reply
Well Royho,
I took the time to write an actually informed blog posts about the problem with the polls, the media’s reporting on them and yadda yadda. It gets right into your “close race” argument.

Here’s the link:
http://outtheotherear.wordpress.com/2008/08/06/trust-the-polls-not-the-pollsters/

Comment by Marc | August 6, 2008 | Reply
A few words taken from Barrack Obama’s first resume.

Conceited, self-absorbed, arrogant, self-important, hubristic, ambitious, vain, snobbish, stuck-up, high and mighty, smug, superior, self-righteous, haughty, full-of-yourself, spectacular, elitist, snooty, overconfident, showy, self-aggrandizing, puffed-up, narcissistic, educated, pious, bigheaded, inflated, vainglorious, condescending, incomparable, untouchable, illustrious, outstanding, superior, flaunting, high-class, pretentious, exceptional, advanced, better-quality, pompous, stateliness, august, ostentatious, erudite, portentous, grand, magnificent, flashy, brassy, significant, affected, brilliant, glowing, special, esteemed, extraordinary, unique, distinctive, exclusive, bold, daring, assertive, intrepid, audacious, valiant, brash, forthright, divine, scholarly, nervy, self-assured, better, enhanced, a cut above, first-class, prominent, patronizing, aristocratic, regal, bossy, famous, high and mighty, breath taking, supercilious, majestic, imperial, stately, fancy, noble, overconfident, egotistical, self-centered, proud, pushy, brazen, presumptuous, aggressive, strident, loud, studious, cocky, boastful, swaggering, audacity, resplendent, knowledgeable, blustery, bullying, memorable, privileged, selected, anointed, god-like, chosen, preferred, vaunted, saintly, extravagant, inflated, overstated, honored, advantaged, intimidating, aggressive, great, luminous, radiant, dazzling, shining, sparkling, gleaming, skillful, intelligent, gifted, refined, accomplished, impressive, swollen, fulfilled, precious, lustrous, elegant, clever, sharp, brainy, well-read, cultured, awesome, learned, awe-inspiring, incredible, urbane, distinguished, imposing, eminent, renowned, masterful, decorous, venerable, sure, secure, poised, self-possessed, certain, paramount, superlative, unsurpassed, finest, high-minded, edifying, enriching, genuine, marvelous.

And that’s before he became Senator. And now celebrity.

Comment by Dean O, Wash DC | August 7, 2008 | Reply
Did you really spend all that time writing that out? Whether you copy pasted it or wrote it out its immensely clear you’re more interested in being a peevish asshole than somewhat with an actually informed opinion.

Writing it all out just makes you obsessive as well.

Comment by Marc | August 7, 2008 | Reply
Ric,

Thank you for the link! 

Kylemeade,

We can only hope. Doesn’t matter what McCain does or does not do. Race matters only if the voters make it a problem.

Kimberly,

I am not a news maker, nor a content distributor. I cannot help your concern.

Izak,

Thank you for pointing that out.

Dean O Wash DC,

Thank you for your humour.

Marc, Daniel,

Thank you for pointing me to your recent post. I check your blog every now and then. I did not notice this one until you told me so.

Thank you for visiting too!

I am aware of the problems in polling. And of course electoral vote is the only thing that counts. When I read polls, I always read the methodology. I apologize I misled you to believe I consider the polls are accurate.

Comment by royho | August 8, 2008 | Reply