Business Week

Did Obama Cause the Stock Slide?
Business Week

Surprised by « Leftism »

Professional investors tend to be more conservative, so it’s perhaps no surprise they’re concerned. « The basic agenda of Obama’s Administration is going to be more leftist and less centrist than I had anticipated, » says John Merrill, chief investment officer at Tanglewood Wealth Management in Houston.

The impact of Obama’s proposals are easy to see in particular segments of the market. In a speech to Congress on Feb. 24, Obama pledged a « substantial down payment » on health-care reform. David Chalupnik, head of equities at First American Funds, points out that, since then, stocks in the Dow Jones U.S. Health Care Providers Index are down 16%. Health-care stocks had been a relative safe haven in the market, because medical spending tends to hold up even in recessions.

Investors aren’t just expressing their political beliefs that taxes and regulations are bad for the economy. They’re also making a practical calculation that they will hurt corporate bottom lines in the future. « What you’re doing is lowering the profitability of these firms, » says Bill Larkin of Cabot Money Management.