What will be the effect of the outcome of midterm election on US Stock market especially dividend paying stocks?
Joe Weinman
Nov. 5, 2006

The outcome of the midterm election can have a serious effect on the stock market. One of the main factors helping the big name stocks paying dividends is the law that eliminated the double taxation of dividends. That is evident when you see the divergence between Nasdaq, which primarily consists of stocks that do not pay dividends. The Nasdaq has to go up more than 100% before making a new high. At the same time the Dow has already made a new high.

The divergence shows the power of the right politicians in the Government. The Republicans will keep the tax cut intact. They are the favorite of the Wall Street. The Democrats on the other hand will try to change things. But the dividends will not be taxed ever the way it used to be taxed before.

The market will have little effect in that sense. But the problem will come from somewhere else. That will drag the market down. Democrats will take control of the House by a little margin. Republicans will keep the Senate by a hair. The new oversight power of Democrats will expose Corporate America like never before. Republicans will support the Corporations while Democrats will after them. Options backdating scandal, Corporate Governance, outright corruption and illegal behavior in the corporate boardrooms (like in HP) will get exposed. That will cause major trouble. As America races towards the center from extreme right and left, the stocks will adjust. The divergence will be correct. Dow and Nasdaq will converge into a normal concert.

What will be the effect of the outcome of midterm election on US Stock market especially dividend paying stocks?
Joe Weinman
The outcome of the midterm election can have a serious effect on the stock market. One of the main factors helping the big name stocks paying dividends is the law that eliminated the double taxation of dividends.
READ MORE>>

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