The election is over, but what has changed? The same issues that existed Monday were still here this morning as I write this. The election results were a lot closer than the antiquated Electoral College results obscured. The players are the same and the issues remain even if the results of the election turned the other way.
Now we must turn to the fiscal cliff. I still believe the market is unprepared for a trip over the cliff even with the consensus of a compromise may be looming. This is contributing to the lack of volatility we are seeing that should be much higher if the markets were as concerned as much as the so called financial experts are preaching.
What to watch for now are comments out of the House speaker John Boehner and the White House for any softening of entrenched positions, particularly on taxes. This will be the main sticking point. Form my viewpoint and I hate to say this that taxes will have to be adjusted on some manner due to the lack of revenue, however I would remain reticent on spending cuts and debt reduction.
Turning to the market we would remain cautious and expect the market to remain range bound. In other words, expect the markets to move based on news particularly related to clues on now the two parties are likely to behave, as we saw Wednesday, rather than longer-term trends.
Mega cap equities, municipals and international stocks are good places to emphasize, however highly diversified portfolios will provide the best opportunity as all this plays out.