Election year may not be good to investors

Already economists are talking about what the Bush administration will do to try to fix this mess. Enter the incumbent party's "massaging of the economy" that Hirsch talks about.

In a speech on Monday, Treasury Secretary Henry Paulson said that work is being done to combat the country's severe housing crisis but there is no simple solution, adding that a correction in the housing market is "inevitable and necessary."

Among the ideas being floated are cutting taxes and making previous tax cuts permanent. Another option could include some regulatory or tax changes aimed at making U.S. companies more competitive globally, according to Merrill Lynch economist Kathleen Bostjancic.

Bostjancic predicts that such actions could be "too little, too late," saying a "fiscal stimulus is not likely to be enough to offset the vicious forces already in place."

Should that happen, this year could turn out like 2000 _ the only year since 1950 that a presidential election year hasn't brought stock market gains in the final seven months.

Back then, the dot-com bubble had burst, sending the overall stock market down and unhinging what had been a robust economy. Then the prolonged indecision in the presidential race between Democrat Al Gore and Republican George W. Bush added to investors' uncertainty. The S&P 500 lost 8 percent in November of that year as investors awaited the outcome of the election. That helped push the S&P 500 down 7.1 percent from June through December of 2000.

There are still 10 months to go until the November election. That's still a lot of time to pass _ 10 months ago such deep credit woes weren't considered likely, and now look where we are.

We'll have to wait a year to know if history turns out to be on investors' side.

MORE FROM STOCKS & ECONOMY

Stocks & economy Section Front

Indecisive Wall Street likely to stay that way Stocks close higher after upbeat earnings Oil dips to lowest level since October Leaps of faith holding up the stock market Consumer sentiment falls to lowest in 3 months Move over, feds, as locals try stimulus too J.C. Penney's profit drops, outlook brightens Disney CEO hints at successor as profits rise Obama administration faults Senate bank bill U.S. trade gap widens more than expected Stocks & economy Section Front   Add Stocks & economy headlines to your news reader: