Congratulations on a long well fought race. Now, “fasten your seat belts, it’s going to be a bumpy ride.” The classic line from Betty Davis seems appropriate. No matter who won this race, they were inheriting a hell of a mess. No need to go into detail, just the list is daunting enough.

The debt, the deficit, two wars without end, the banking crisis, the mortgage crisis, the worldwide economic slow down, Social Security, a deadlocked partisan congress, health care, a tax system that everyone thinks is unfair, collapsing US auto manufacturers, jobs being exported at light speed, the defense of our northern and southern borders, a recession, still no energy policy, and what appears to be a complete collapse of our image abroad.

Why would anyone want this job? It’s beyond me. The real question is now that he has done what seemed like the impossible, how will it affect the markets?

This is a long and short-term issue. In the short term, the markets should rally. If for no other reason than the media and press will ease up on the hugely negative pounding they have been delivering for the past two years.

A rally is also likely because, as everyone knows, the market hates uncertainty. Even though this race has been all but a certainty for a long time, it has added to the mood of “what’s next.”

More specifically, and on the bright side, we should see good things for the solar and alternative energy sectors, biotechnology, the health care industry, and if he makes good on his promises to restore jobs to the middle class, manufacturing could see a jump.

Long term is another issue. We are in several very tough spots. We have a full-blown recession and the last thing we need in this environment is a tax increase. It could be fatal.

On the downside, pharmaceuticals will most likely take a hit. He is pretty clear he wants to change how business is done in this area. Defense contractors stand to lose if he makes good on getting our troops out of Iraq and Afghanistan, and if he is as pro new energy sources, as he claims, traditional energy stocks could be in for a rough time.

All of Obama’s promises about increasing taxes on the so-called “wealthy individuals” could be the proverbial last straw. If the President elect makes good on his promise to redistribute wealth by increasing taxes in this economic environment, we could have a longer and deeper recession than anyone has predicted.

The key to all of this is that all of these were campaign promises. Campaigns to me are a lot like our first few years in college, and last few years of high school. We had all the answers and no responsibilities. It’s easy to talk change and promise the middle class another New Deal, but what he will actually do is anyone’s guess.

The best thing the markets have going for them is that Obama is a very, very smart guy. And as smart guys usually do, they surround themselves with smart people. Hopefully, these smart people will help the new president see that most of the ideas used in the campaign to get votes need to take a back seat to the realities we face as a nation.

If this “smart guy” scenario plays out, we could do very well with this administration. When it comes to the markets, recent Democrats actually have a better track record than Republicans. If Mr. Obama is enough of a politician to beat the odds and win this election, I have to believe he is also enough of a realist to look at the situation he has inherited and deal with it appropriately.

History has proven that the markets do well no matter who is President. Most conservatives expected the world to end when Clinton was elected. Liberals threatened to leave the country if Bush was elected. Everyone under the age of 30 had heart palpitations when Nixon won in ‘68. The markets always find a way to make it to the next election.

Source: Congratulations President Elect Obama