[Note: This is the second of a two-part series on the race for the Democratic Party's nomination for president of the United States. Read part one: Obama's New Hampshire strength highlights Clinton's vulnerablity]

Clinton's mistakes

Why didn't Clinton win by a bigger margin in the New Hampshire primary? The main reason was a misguided campaign strategy that presented her in too many town meetings and gymnasium forums, and not enough as a concerned, positive, relating, trustworthy leader and as a real person. Clinton has never been accused of not being intelligent or organized or professional: what she has been accused of is lacking that "likability" and "press the flesh" quality that every modern presidential candidate -- and every president -- must display.

Ironically, Hillary Clinton's campaign strategy in Iowa and New Hampshire departed from President Bill Clinton's winning presidential campaign strategy. What was an example of President Clinton's positive vibe? During his campaigns, when Bill Clinton arrived at a location for a speech and there were 400 people lined up outside of the hall, who couldn't get in, waiting to see the candidate, Bill Clinton wanted to shake the hands of all 400 people outside. No joke. Clinton would arrive one hour, two hours late for an event, if it meant he could shake hands and make positive, personal contact with as many people as possible. Hillary Clinton must do the same: she must be real, show that she cares, and show that's she's human, just like everybody else. That's a big part of what Hillary Clinton must do to move forward and win the Democratic Party's nomination.

There's an old political adage that goes, "Regarding the nomination process, Republicans fall in line, Democrats fall in love." Tuesday's New Hampshire primary provided ample evidence of the above, for each party.
Sen. Barack Obama's (D-IL) strong showing instantaneously catapults him to formidable contender status in the Democratic race. His performance also suggests -- and we won't know this empirically until survey research has been analyzed -- that he has expanded the electorate. Obama increased voter turnout particularly, and unexpectedly, among voters ages 18-21. This age group has had the lowest turnout rate of any age group in primaries and presidential elections since 1952 when political scientists began keeping statistics.

Obama's appeal among independents was also high, and -- also troubling for the campaign of Sen. Hillary Clinton (D-NY) -- his appeal among Democratic Party-affiliated voters was much stronger than expected. Furthermore, African-American voters -- although not a major factor in New Hampshire -- now appear to be shifting decidedly in his direction nationally, a big change from the previously overwhelming support they gave to Clinton as late as this summer. As a result of the latter, look for the Clinton camp to face a markedly tougher fight in the South Carolina primary, which is the next hurdle, along with Nevada, before Tsunami Tuesday (formerly called Super Tuesday), on February 5.

Sources close to CNN broadcast journalist/commentator Lou Dobbs said he is seriously considering a run for the U.S. presidency in 2008, The Wall Street Journal reported.

Dobbs, who formerly hosted CNN's MoneyLine business news show and currently hosts CNN's Lou Dobbs Tonight has seen both his ratings and his name recognition rise after his work's focus turned away from news reporting and anchoring and toward political and economic commentary.

Dobbs, an independent, displays an ideology and a political world view that many have characterized as a modified hybrid of Ralph Nader and Pat Buchanan -- i.e. populism combined with strong views against free trade (or current trade frameworks) and against illegal immigration.

Dobbs is a frequent critic of both the Democratic and Republican parties, which he argues don't represent the interests of the typical person or the middle class. His show's website describes him as "an independent populist and the leading media advocate for working men and women, their families, our middle class and the American way of life."

Political Analysis: Unless there's a tidal wave of discontent in the American electorate not tallied by pollsters, Dobbs, as a third-party candidate or as an Independent, has virtually no chance of being elected president of the United States. Although his name recognition is rising and he has a positive public image, it's highly unlikely Dobbs could assemble the campaign staff and money required to compete effectively against Democratic and Republican parties' nominees.

However, this is not to say that Dobbs could not broaden the discourse, i.e. "force the discussion of less-publicized issues" during a debate. Dobbs could accomplish this, but it must be emphasized that making points in a debate is a much easier task than receiving enough votes to win the electoral college vote for U.S. president.

The University Southern California (USC) had such a good recruiting season under super coach Pete Carrol that one of their star running backs transferred out because he thought he would not get enough playing time, and they have been favored since the end of last season. USC is no longer undefeated --- UGH! Yesterday they were upset by unranked, 40.5 point underdog, Stanford University -- AT HOME -- double UGH!! This ended a 35 game home winning streak and a 24 game Pac-10 conference streak.

Last week against Washington University they pulled out a squeaker after committing 16 penalties -- read that as "freshman mistakes," although not all caused by freshman. Those of us delusional alumni rationalizing the close game bantered about how good a team you would have to be to win a game where you had to overcome 16 penalties. Now USC loses to Stanford (my father-in-law's Alma mater) at home after supposedly spending all week at practice refocusing. Not that all freshman are bad, Stanford's freshman quarterback Tavita Pritchard, in his first start played the game of his life.

So why is this relevant to business:

• Trying to guess what something is worth and predicting the future, like point spreads and rankings, is hard without the advantage of a track record.
• Attempting to manage an organization that is constantly changing by throwing together a lot of new people from different places (or enterprises) can create havoc, integration problems and lack of efficiency.
• An abundance of talent and potential can be a detriment if it does not perform as a cohesive unit. Teams win, not individuals, and in USC's case all the individual talent in the world does not seem to be meshing.

Now compare this to the exclusive club of senior (Christian Coalition) republicans that met this week to discuss their displeasure with their presidential candidates. They are so unhappy with their choices because none of the candidates are pounding the pro-life/anti-abortion drum, or the family values drum, or the school voucher drum, or several other drums, that they are actually making noise about opting for a third party. This would a freshman mistake of the highest order!

Google Inc. (NASDAQ: GOOG)'s official blog announced "another way that YouTube is leveling the political playing field: The CNN/YouTube debates. For the first time in history, the questions asked in both a Democratic and a Republican primary debate will come straight from YouTube videos."

Users are invited to submit YouTube videos featuring questions for the Presidential hopefuls, and all questions in the two debates will come from YouTube users.

This is the latest in YouTube's You Choose '08 program, where numerous candidates have posted videos making their pitch for the nominations. Joe Biden has posted 100 videos, but former private equity boss Mitt Romney leads the pack with an astounding 186 YouTube videos.

I'm not sure whether the YouTube debate is as big of a milestone as they're billing it as -- there have been debates where ordinary people submitted questions for as long as I can remember. But it's a nice gimmick, and maybe it will get more people interested in and involved with the electoral process.

Tired of hearing about the elections yet? Not Jim Cramer. Tonight on his MAD MONEY show on CNBC, he decided to point out some ways the elections could make you money.

Boy, this sounds like 'deja vu' all over again.

Cramer said that, while corporations may have lost some of their stranglehold over the government, the markets rallied anyway. This, he explained, was the market "getting past the event." Cramer said that gridlock has been good for the economy but you can't like the market quite as much as you did yesterday. Why are you unable to like the market, you ask? According to Cramer, it's because the Democrats care more for the interests of consumers than those of corporate shareholders. If you're going to quantify this, just subtract one multiple point off your stock's P/E ratio. BUT....Cramer says you have to stay in the market and don't be put off on the headlines.

Cramer said the Dem's won't have the power to do much besides making the companies look like they are less of a corporatocracy (my word not his). Cramer said that even Waxman shouldn't keep you away from stocks. Cramer says you do have to pay attention to Washington, but he thinks Pelosi won't stop Google Inc. (NASDAQ:GOOG) from earning $15.00 next year. He also said to stop bashing Halliburton Company (NYSE:HAL) because it is done going down. He thinks the Democrats won't touch the credit card companies because deadbeats don't have lobbyists. Cramer still likes MasterCard Incorporated (NYSE:MA) and says that Fannie Mae (NYSE:FNM) will win. Cramer still thinks Apple Computer, Inc. (NASDAQ:AAPL) is going to $100 by year end and he thinks Cisco Systems, Inc. (NASDAQ:CSCO) is still good to be in with it up huge after the report. In a call-in Cramer said to keep the ExxonMobil Corporation (NYSE:XOM) and not sell it.

To paraphrase Gordon Gekko from the 1987 movie Wall Street, "Gridlock is Good." As I mentioned in my earlier post The October Surprise: Poll news may be more important than Fed news for the stock market, the stock market tends to react quite positively to gridlock. It restrains the extremes of both parties from spending to pacify their respective bases. Without the ability to pass major legislation, fiscal responsibility is enacted automatically.

Remember that when the Democrats lost control of Congress in 1994 leading to divided government, the Boom of the 1990's began. I am not saying that a similar scenario will unfold here if the Democrats take control. However, gridlock has historically been quite positive. I discuss this in The U.S. Stock Market: Five reasons 2007 is looking like 1995.

We also have to look at what we mean by "Gridlock." As long as the Democrats do not demolish the Republicans at the polls, achieving bullet-proof majorities in both houses of Congress, gridlock will occur. I believe that I can safely say the Republicans will not increase their position in either branch.

In case you missed it, today is election day. I know there are some of you out there who will vote because you don't like the idea that our government went to war in Iraq on false pretenses, ran up $9 trillion in debt, let a pedophile congressman prey on pages, or took bribes from a corrupt lobbyist.

But this is a blog about stocks. And if you care about that portfolio of yours you'll vote Democratic. Granted it's a bit early to think about the 2008 presidential election but this study published in Forbes two years ago clearly shows that Democrats are better for your portfolio.

Don't believe me? Forbes, not a bastion of liberal thought, conducted a study of the post-World War II presidencies. It found "that the S&P 500 has averaged a total return of 14.1% per year under Democratic presidents since April 1945, and 11.8% under Republicans. The best total returns--17.4% per year--were under Bill Clinton, whose presidency ranked first in economic results. Gerald R. Ford ranks second, followed by Harry S. Truman."

So get out there and vote for your own net worth and/or your personal values. But by all means vote!

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, and a Professor of Management at Babson College.

Everyone is focused on the results of the Fed meeting which will be released Wednesday. My forecast, along with that of most others, is that the Fed will leave rates unchanged. I also believe that Fed language will emphasize a continuing focus on core inflation, leaving open the possibility of a rate increase but nothing more. This will be, in effect, a continuation of the status quo. No news, just more noise.

However, the real action may be where no one seems to be looking -- the polls for the upcoming Congressional election. Everyone in the mainstream media is forecasting a massive defeat for the Republicans, possibly in both houses of Congress similar to what happened to the Democrats in 1994.

Gridlock in history has been considered to be good for the equity markets because it restrains the extremes of both parties. In 1994, the Republican takeover of Congress forced Bill Clinton to the center and began the prosperity of the 1990's. However, this time things may be different.

A massive Democratic majority in the House along with a smaller one in the Senate could create the worst of both worlds. Democrats firmly in control would attempt huge social spending to reward their base and prepare for the 2008 elections. Republicans would respond with spending bills and tax cuts to satisfy their constituencies. Unlike earlier Republican Heads of State, President Bush's focus has been on winning elections instead of balancing the budget. Fiscal responsibility would become a secondary priority for both parties adding to inflationary pressures and possibly causing the Fed to adopt a more hawkish tone.

Much of this depends upon whether the Republican base stays home on Election Day. If it does, the above scenario becomes likely. However, this is by no means certain. Editorials by John Podhoretz and Dick Morris cite data from Pollster Mark Rasmussen that shows that the Republican base may be more scared of the Democratic leadership than disgusted by a Republican Congress. If this is true, Republican losses may be less than anticipated.

A Republican loss of the House while retaining control of the Senate would result in the gridlock scenario favorable for the equity markets. Even if one party gains control of both branches of Congress, it will be by very slim majorities. No one would be able to accomplish much with the extremes of both parties being restrained from fiscal spending to pacify their respective bases. This would allow the slowing economic scenario desired by the Fed to unfold, with no need to raise rates.

As Election Day approaches, it may be the voters who determine what the Fed will do.

Doug Roberts is the Founder and Chief Investment Strategist for FollowtheFed.com, an independent research firm focusing on investment strategies using the Federal Reserve's impact on the stock prices. He previously held executive positions at Morgan Stanley Group and Sanford C. Bernstein & Co.