The mid-term elections on Nov. 7 are now less than a week away. Polls indicate that Democrats are coming on strong. In fact, a Wall Street Journal/NBC News poll released today found that 52% of voters hope Democrats will control Congress vs. 37% who root for Republicans.

Looks like we may be in for a bout of governmental gridlock -- when opposing parties control the executive and legislative branches. Traditionally, investors cheer at this prospect (indeed, that may be one reason the market has fared so well in the past month). The theory is that when there is gridlock, the Federal government isn't able to get that much done and investors don't have to worry about pesky issues like healthcare reform, tax increases or major policy shifts of any kind.

That's the theory anyway. But it doesn't quite pass the smell test, if you ask me. Is it really the best thing for our country, economy and stock market at this point in time to have an ineffectual Federal branch? I don't think so...

Continue reading The elections: Why gridlock could hit stocks

The elections: Why gridlock could hit stocks originally appeared on BloggingStocks on Wed, 01 Nov 2006 19:00:00 EST. Please see our terms for use of feeds.