The markets respond to Bush's win, and some Enron/Merrill criminals

Yesterday, during market hours, Bush won the election.

Immediately Big Pharma stocks and defense stocks saw big price increases. Those price increases represent the aggregated opinion of thousands upon thousands of people -- people who are mostly white, mostly men and mostly Republican, and who are politically proportionately probably quite a bit more skewed than the 51/48 skew shown in the 59.1 million vs. 55.6 million presidential vote.

These people express their opinions via buy and sell orders. And yesterday the people wanting to buy Big Pharma and defense stocks were more gung-ho than the people wanting to sell, which means that they were willing to drive the price up to bring more sellers out of the woodwork.

The most obvious way to explain the vigor of these buyers is that, with Bush's victory, they believe that the threat posed to the pricing power of the Mercks and the Pfizers of the world (as posed by John Kerry's proposal to open up their markets and thereby increase the bargaining power of their customers, which is us) and the threat to the defense procurement budget (as posed by John Kerry's proposals to use more diplomacy in overseas policy ) has waned.

Sounds about right, doesn't it?

But should the average investor, looking out for his or her financial health, be thinking about short-term sector and industry bets like that? Absolutely not. That sort of thinking is the province of actively managed, 40-hour-a-week money. The average person should not be thinking about those things at all. They should be thinking about whatever it is they think about to generate money-in and, with the time they have remaining, enjoying themselves. Bets aren't good; short-term sector bets are worse.

In somewhat related news, a jury convicted a bunch of folks from Merrill Lynch in the Enron barge it's a lease, no it's a loan, no it's a lease scheme. Five men were convicted; a female defendant, who alleged she had refused to go along with the scheme, was acquitted.

To my knowledge, this is the first trial arising out of the Enron debacle. True, some folks have pleaded guilty without having a trial, but this looks to be the first Enron-related trial.

Interestingly enough, the trial was against four Merrill bigwigs and one non-bigwig Enron employee. That is a telling fact. The Enron folks were, and still are, apparently, a couple of steps ahead of the Merrill folks. In fact, it's possible that the ML guys were absolutely danced across the floor by the ENE guys.

But the bigger question here is this: what should Merrill do about these convictions? One option is to ignore them, which is the route it has taken. I just spent ten minutes looking for something on ML's site and came up dry. Maybe a press release to express some apologies for having employees -- bigwigs at that -- involved in criminal activity, and a re-doubling of its efforts to be non-criminal in its activities henceforth?

Sure, ML fired the folks (presumably) and, sure, ML got fined $80 million for the barge scheme a year and a half ago, but how about expressing some compassion and some moral indignation about what happened within its collective soul?

No. Nada. Nyet. Don't hold your breath.

All of which leads me to say that anyone who does business with ML should truly consider if this is the way they want the world to be.

Because just like those Big Boys in the market expressing opinions about Bush's reelection through buy and sell orders, all of us can express our opinions about businesses that just do the wrong thing -- criminal wrong things -- by not doing business with them.

It's the financially healthy thing to do.

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Look for more comments in the future about what it's like doing business with Big FSPs -- financial services providers -- and what it means to a person's financial health.

Hint: you gotta be careful, because very few of them have your interests at heart.