Betting on the Incumbents

Goliath vs. David

No, I don't know how the elections next month are going to turn out.

But when it comes to the stock market, here's a tip: bet on the incumbents.

That's because today's economic environment is particularly hospitable to "incumbents" -- established, large companies -- and hostile to upstarts.

At least, that's what the capital markets are indicating.

So, "mega-cap" corporations with already strong balance sheets -- think, Microsoft, McDonalds, Johnson & Johnson, Pepsi, etc. -- are able to borrow billions at infinitesimal interest rates.

Meanwhile, smaller companies apparently are still finding themselves on the outside of a "credit drought."

Sign Clutter

Sign(s) of the Times: "Vote For" & "For Sale"

Are there really that many homes for sale at the moment?

Drive down any busy urban Twin Cities street these days, and it can seem like the entire block is for sale.

Until you realize that the names on a lot of the signs aren't Realtors selling homes . . . but candidates running for office.

Look for "inventory" to peak just ahead of the election in two weeks (always the first Tuesday of November).

P.S.: Ironically, this phenomenon is more subtle in an off-election year like 2009, because instead of saying "Obama" and "McCain," the candidates' signs say "Peterson" and "Johnson."