Congratulations Mr. Obama

No matter your political persuasion, it is impossible to understate the historical importance of this week’s US presidential election. Not just because we elected our first African-American President, which is quite amazing. But also because the Democrats have taken a very strong majority in both houses of Congress, giving them an extraordinary opportunity to create and push through their agenda working with the new President.

The question of couse is what agenda that will be, and what it means for us in the world of small and mid-cap markets. The pundits themselves seem confused as to which direction they believe Obama will go. Will he stay consistent with his record as a Senator and move sharply to the left? Will he “pull a Clinton” and despite his liberal background move more to the center in order to increase his chances of being re-elected? Will he stay true to his promise to raise taxes on those making more than $250,000 and raise capital gains taxes? For anyone on Wall Street, we know that capital gains is a hot button issue for investors of all sizes. Many are concerned that raising any taxes now on anyone could have a negative effect on rebuilding the economy.

And what about reform of our regulatory structure? Obama has stated that he believes the manner in which we regulate the securities markets is broken and should be changed. Personally I agree and was pleased when there was serious talk earlier this year about this issue. Will he make this an early priority? The chances are not bad because the economy was clearly the #1 issue on people’s minds, and one presumes that his early actions will need to show he recognizes this and will propose both short and long-term initiatives to improve our economy and the stability of our securities markets.

An early sign will be his choice to replace SEC Chairman Christopher Cox. Ideally we find a new chairman who is supportive of promoting smaller public companies and removing impediments to capital formation while devoting real enforcement resources to bringing bad guys who give too many of us a bad name to justice. Hey…how about Mike Bloomberg? Crazy?

The dramatic drop in the stock market in the days after the election, in my view, simply reflects the fact that, despite the enthusiasm for Obama and his election, the serious problems still remain. Let us hope that our new President and his team hit the ground running with a goal of returning our country and world to prosperity, security and strength. We are all behind you.

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