The Hillary Clinton Stock Market and Economy - Three Areas to Consider

I would like to remind the reader of the last time in our country's history when taxes, unemployment, and inflation were extraordinarily high: the late 1970's during the Carter presidency. Inflation was raging and interest rates were in double digits. Many consumers in our economy today do not have vivid memories of that time.

Yet after the 1970's inflationary spiral was broken, at the expense of a severe recession with extremely high unemployment - we have since enjoyed over twenty years of a fundamentally good stock market and economy.

But what if today's relatively good stock market and jobs creating economy were to change? I must admit, I am of the opinion that the winds of inflation may be building a momentum again after all these years of disinflation. I agree with Alan Greenspan's opinion in a CNBC interview that we no longer have the luxury of implementing easy monetary policy, as we did after the technology and stock price bubble deflated after 2000, when deflation was actually a threat.

We have an important election in 2008 that may determine the course of the stock market and the economy in a manner not seen since the late 1970's. Hillary Clinton is the current favorite to win the Democratic nomination - and she is running a liberal, progressive campaign. The Democratic nominee, whoever he or she may be, may win the White House.

There are three areas to consider with respect to why the stock market could decline into a bear market should the economically liberal platform be enacted.

The first proposal of the Clinton campaign that would be anathema to the stock market is the planned redistribution of wealth. Giuliani, in a CNBC interview, actually called this plan an entitlement program for the middle class. This would be in the form of a tax-the-rich-and-give-the-funds-to-the-middle-class policy. This sounds good in theory, but this action would not create a penny of additional wealth or a single new job in our country. The policy simply takes away from one group to give to another more favored group of people. Such a policy could even lower the amount of wealth in our country, as those businesses that are creating jobs might make less money - especially small businesses that may have to lay off workers because their taxes are higher. The economy, and consequently the stock market, could suffer.

To give an example in industry of a possible redistribution policy, an obvious target of the Clinton campaign has been the almost universally hated oil and gas industry, which the Senator believes makes too much money. In fact, I saw an excerpt of a Clinton speech on TV that the senator wanted to "take that money" and I suppose give it to a more favored group of people or industry. This action would amount to an expropriation of assets and would reduce employment in the oil industry. The stock market could react badly to that.

I would like to point out that there have been times in the history of the oil and gas industry during which these companies have been in a depression - but they were not bailed out. But even such a hated industry as the oil and gas industry is capable of creative movement. Fortune magazine reports that Royal Dutch Petroleum has been investing heavily for years in scientific research to produce oil from shale in America. Fortune reports that there is a potential production of 300,000 barrels a day - and it would be profitable at $30 per barrel. They further report that Royal Dutch's technology is supposed to be way ahead of their competitors, with the company holding some 200 patents.

Royal Dutch seems to think those years of heavy investment in research and development will pay off in the near-term horizon. They would also plan to build the first new refinery in the U.S. in decades. Heavy taxes on this industry could discourage new investments such as the Royal Dutch project. The end result would be more energy dependence.

The second idea of the Clinton campaign that would hurt the stock market and the economy is the re-regulation and regulation for the first time of major industries in our economy. If an unfettered industry is seen as making too much money, then it might be a target for being regulated, which inherently makes the industry less creative, vibrant, profitable and flexible (with concurrent less ability to withstand economic shocks and adapt to changing economic conditions).

Alan Greenspan, in a speech reported on CNBC, attributed the flexibility of our economy as one reason why we have not had such deep recessions in recent years. While one sector of the economy is under water, other sectors can pick up the slack and prevent a recession from becoming damaging. But, if employees are tied by regulation to industries that are no longer competitive, then the overall economy would be hurt - those workers would not be retrained for the emerging new industries of the future. The economy would be more rigid by definition and we might experience a declining standard of living as older regulated industries would not make it in the global economy and become obsolete. Like it or not, our capitalist economy works best as a self-correcting mechanism, with new industries supplanting the old.

An industry which could suffer a decline in employment and innovation because of regulation is also a target for criticism: the drug and medical devices companies. We all remember Senator Clinton's early 1990's health care plan, crafted behind the scenes, which really would have been "government run healthcare." The Senator never apologized for that failed attempt at healthcare nationalization, but even now blames her former opposition. The healthcare sector in the stock market at that time fell out of bed while the Clinton plan was being propagated. If nationalized medicine were to become a threat again, that poor action in the stock market could be repeated. So far, the Senator's "American Health Choices Plan," as smoothly explained on the Clinton campaign website, seems on the surface pretty innocuous. But it also would be extremely expensive, perhaps tempting Clinton (if she were elected) to revive her previous ill-considered plan.

I believe that there must be a way to insure the uninsured for hospital stays, doctor visits, pharmaceuticals, etc. without uprooting the entire system. I think one question that is not being discussed is whether a Clinton administration would propose to control drug prices. We have had experience with price controls under President Nixon, and it just produced shortages of goods. There could be shortages of essential medicines if price controls on drugs make it less profitable to invest in the research it takes to develop and produce them. A less profitable atmosphere for the drug industry means fewer drug companies and fewer drugs being invented. Why should entrepreneurs launch new drug companies pioneering new science when their prices are to be controlled and profits regulated?

The fact is that the pharmaceutical industry is not the problem - they are the solution. A pharmaceutical company might spend one billion dollars and two decades developing an important drug that can save lives and keep people from costly stays in the hospital. If artificial controls are placed on the drug's price, then it actually may not be profitable for the company to develop new drugs in the future. They could fire researchers and other employees to cut costs. Since over 90% of all new pharmaceuticals are developed in the US, health care costs would likely go up as new cost saving cures would not be developed.

Drug companies have invented life saving medicines that have kept tens of millions of people out of costly hospital stays, and saved and extended many lives. I believe these drugs are an extremely cost-effective solution to illness and disease - and I do believe all private insurance should cover prescription drugs liberally.

The third area of a possible Clinton presidency about which one must be concerned if you are a stock market investor or simply a taxpayer, is free trade. An open trade system has allowed our country to prosper in the last two decades. Granted, currency manipulation on the part of a trading partner (such as China) is not free trade - but most of our trading partners and the newly emerging eastern European economies are adopting lower taxes and free market policies. It is a shame that the liberal wing of the Democratic Party has not received that message and is indicating a path for this country that may bring our economy and our stock market back to the past economic policies of the 1970's.

The outcome of the 2008 presidential election will do much to determine the outlook for the economy and the stock market in the next several years. Regardless of who wins, the second year of the presidential term is usually poor for the stock market, as the policy makers make the economy take its medicine early on in the term.

The Federal Reserve, in its current easing mode, should encourage the stock market until the months before the election, when it will be clearer who the victor will be. At that time, the stock market's future direction will be determined by the degree of wisdom of the victor's economic policies, and, of course, Federal Reserve policy.

I was first exposed to financial markets when I started reading the stock quotes out of the newspaper to my businessman grandfather, who was legally blind, when I was about ten. I remember Papa always told me: "Buy Triple A" (the best stocks). Later, I studied economics at both Vassar College and Columbia University, where I became intrigued by the link between psychology and economic theory. My current e-book, A Way to Wealth - the Art of Investing in Common Stocks, is available at my website, http://www.ReiznersWay.com.

This article contains the opinions and ideas of its author and is designed to provide useful information to the reader on the subject matter covered. The author may or may not have current positions in the investments mentioned in this work, and the author may from time to time make investments in a manner that is not described here. Past performance is no guarantee or prediction of future results and any investments made, based on the opinions and ideas contained in this work, may or may not be successful. The strategies contained herein may not be suitable for every situation, and the author is not engaged in rendering legal, accounting, investment advisory or other professional services.

Specialising in Different Areas of Wildlife

After you have been studying wildlife for a year or so, you will have built up your local general knowledge and may want to go deeper and specialise in one particular group of organisms. To do this, the best way is to join a national society and members there will be glad to help you. You may also be lucky and have a local society as well. This is ideal as you can share knowledge, ask for advice and go on field trips in your local area. However, this does depend on where you live.

There are a number of factors to consider when specialising. After your first year you will now which organisms appeal to you and you find interesting. It may be an easy choice for you. If not, here are some of my observations on what it is like being a naturalist in particular specialist areas. They apply to where I live in the UK.

Mammals

There is a national Mammal society and they have local groups that you can join. There aren't too many mammals in the UK and learning to identify them is fairly easy. The hard part is finding them and there is a greater emphasis on tracking and hunting skills than for other areas. However, those people who like mammals delight in their greater character and personality and you can learn much more about their life cycle and lifestyle than for other animals. Although some surveying is done, the main focus on mammal work is getting involved in conservation, habitat creation and protection of local animals.

Birds

Learning about birds is very easy in the UK. There are many local groups, with plenty of members and there are many reserves well organised by the RSPB and local wildlife trusts. Learning bird identification is fairly easy and there aren't too many birds to learn. You can also do it pretty much anywhere. A great feature of birding is that you're never quite sure what you will see on a field trip, they are full of surprises. On the downside, birds are so popular that it is difficult to make any new discoveries or see something that someone else hasn't seen already. There is the opportunity for survey work and this is always welcome, but if you want to make a really valuable contribution to local and national wildlife, I would suggest that the other areas are much more needy.

Butterflies

Many bird watchers, when wanting to expand their knowledge like to move on to other flying creatures, so butterflies are an obvious next step. Butterflies are also ideal for children and beginners. They are fairly easy to spot, there aren't too many to learn, there are some easy ones to identify and some trickier ones as well. The have a fascinating lifestyle and are always a delight to see. Studying them gives you a great insight into conservation and ecology. There are butterfly societies all round the country and you have a great opportunity to contribute to local and national knowledge.

Moths

From butterflies, moths are a logical next step. There are far more to learn and identification is more difficult. There are also many more micro-moths which are very challenging. Also, their nocturnal lifestyle means that you need to learn how to use light traps. However, surveying s always exciting as you are never sure what you will see and any survey work you do is welcome and makes a real contribution.

Other insects

Dragonflies are popular and are well known. You can buy good field guides for them and they are fascinating to study. However, you have to learn how to catch them in a net and some identification is tricky.

You an also learn about other insects such as grasshoppers & crickets; ants, bees & wasps; flies, bugs, aphids and beetles. Observation of these insects is rather different to birds, butterflies, flowers etc. where you can identify what you have seen in the field. Studying other insects usually involves trapping, collecting and killing them. The insects then have to be prepared for a microscope slide and many hours of study in your own home is needed to identify them. You also have to build up your own collection of samples for comparison. Field guides exist for some areas, but not others, and keys for identification can be hard to find. However, societies exist to provide help and support and you will certainly be able to make new discoveries and make a valuable contribution to local and national knowledge.

Flowers

Studying wild flowers is very rewarding as there are many different flowers to learn and you will always see a many of them on a walk in the countryside. Also, their bright colours and delicate beauty make them aesthetically pleasing and great subjects for photography. Learning identification is a bit daunting as there are 10 times as many plants to learn as birds. Also, some features are a lot more subtle and difficult to see than for birds or mammals, so it can take a long time to become proficient. However, being stationary, you can always go back to a plant you have seen and check it out later! There are enough botanists to cover the country, but more are always welcome and there are enough specialists and local societies to help you, though there is a bias in popularity towards south-east England.

Mosses and liverworts

Mosses are slightly more difficult to identify than flowers and aren't as obviously attractive, but have a certain charm of their own. There are enough bryologists around the country to provide field trips and give you support. A new field guide has also been produced which makes identification, and keeping up with current areas much easier than it used to be. You still need to collect samples, though and some microscope skills are required. One advantage of studying mosses and liverworts is that it can be done from late autumn to early spring, when there are few birds or flowers around, so it keeps you interested at a quiet time of the year.

Fungi

Fungi are absolutely fascinating and, like birds, you are never quite sure of what you will find on a field trip. You can also study them at a time of year (Autumn/early winter) when other wildlife isn't so abundant. There are thousands to learn, however, and identification is tricky. The lack of a good field guide for the UK is a definite downer. A key feature of studying fungi, mycology, is that the season is fairly short and you can get out of practice in the spring and summer months. Like studying insects, you go on a field trip to collect samples and although some can be identified in the field, a lot of work is one back at home. You definitely need good microscope skills as well as some preparation skills as well. There is something of a shortage of mycologists in the country and more are welcome. Any work you do will definitely make a contribution to local and national knowledge.

Lichens

There is a serious shortage of lichenologists in the UK at the moment. Again, it is the type of study where you collect samples in the field and take them home for further study. Some specialist skills are required for identification, but it learning about these organisms and their interesting lifestyles is fascinating. The Lichen society is the national organisation that will provide you with help and support.

At the Seaside

Many people go on a trip to the seaside when they are at school and you learn about the fascinating organisms that live there, such as sea anemones, crabs, sea shells and seaweed. Studying sea-life is fascinating and gives you the opportunity of studying organisms in very unusual and interesting orders, which have unusual lifestyles. There is no obvious national society for studying wildlife at the seaside and there is no definitive, in-depth, field guide available. However, joining a local wildlife trust will help you to learn where the best sites are and introduce you to local experts. Alternatively, you can go on a course run by the Field Studies Council and they will teach you some identification skills. Overall, though, this is an area that you learn in the field, from another person, rather than by reading books.

Summary

· Do you like to identify what you have seen straight away? Birds, butterflies, flowers and seaside animals are the best areas for this.

· Do you like to sit still and observe habits, characters and life-styles? Mammals and birds are good areas good for you.

· Do you like to learn about tracking and hunting? Again, mammals and birds are the best for this.

· Do you like to go on walks and record the wildlife that you see? Birds, flowers and butterflies are the best to study this way.

· Do you want to study an area where there are only a few organisms to learn? Mammals, butterflies, ferns, grasshoppers, bumble bees and seaweeds are some areas you could consider.

· Do you want to get involved in an area with thousands of organisms and new ones being discovered all the time? Fungi and many of the insect orders such as bees, flies, bugs and moths are recommended. For the ultimate challenge, you might want to consider parasitic wasps!

· Do you like to produce lists of all that you have seen and do survey work? Then flowers, insects and fungi fit in well with this practice.

· Do you like to collect samples and examine them at your leisure back at home, usually with a microscope? Then insects, mosses, fungi and lichens are studied this way.

I have given a brief overview of the different areas of wildlife, so I hope it has given you some ideas and pointed you in the right direction.

Michael Knaggs is a keen and enthusiastic naturalist from Yorkshire, England. He has been observing birds, butterflies and wild flowers since he was 12 years old. He is currently a member of the Wild Flower Society and the Bradford Botany Group.