Stock Market Performance By President

[loosecannon]

The same thing happened in 2002-2008, Reverse.

And I don't think you can so easily discount the hundreds of billions that have flowed into the stock market because of the 401K tax shelters.

That legislation alone might be responsible for the stock market being overvalued by 50%.

 

[loosecannon]

Discuss

cyclical as expected, we still wind up with a net plus.

I would not bet my life savings on that conclusion Trajan. Between bubbles and inflation and the unexpected we could always end up with the DOW being worth absolutely nothing in the end.

Ultimately stocks are like fiat currency. Supported only by confidence.

 

[Revere]

The same thing happened in 2002-2008, Reverse.

And I don't think you can so easily discount the hundreds of billions that have flowed into the stock market because of the 401K tax shelters.

That legislation alone might be responsible for the stock market being overvalued by 50%.

No, the amound of money being pumped into the markets nwo is unprecedented.

You can't compare individual investors 401ks, whose tax deductibility is capped, with the Fed printing hundreds of billons of dollars right nw.

The stock market is really overvalued now. It's just fake money, not even real money people earned and invested.

 

[Revere]

Only a moron would compare 401ks invested in the market to the Fed printing hundreds of brillions of dollars.

Were 401k investors buying hundreds of billions of dollars in US Bonds like the Fed is doing now, too?

 

[Revere]

I suppose the idiot thinks the mortgage interest deduction inflated the housing market, and not all the loans government demanded banks made to people who could not possibly make the payments and hd no downpayment and thus didn't care what price they offered for homes.

 

[loosecannon]

No, the amound of money being pumped into the markets nwo is unprecedented.

You have no idea, you just assume. I doubt you are correct.

But just for shits and grins let's just assume you are correct.

On Oct 1st 2007 the DJIA peaked at 14,279.96, 2606 points higher than today.

Has the DOW lost real value since 2007 or was the bubble demonstrably larger at that point?

 

[william the wie]

The shadow market of SWFs (Sovereign Wealth Funds) account for 10s of trillions of dollars in hot money and given their tendency to invest in highly leveraged hedge and private equity funds the level of their influence cannot be discounted. Norway's SWF purportedly owns 1% of the world's total stock equity and it is not the big boy in this market being only $400 B in size. This market is involved in stocks too.

So Obama has to figure out who the players are (not known for certain because cutouts may be used to avoid political ill-will), how much they are worth (Norway is one of the rare cases where the books are published.) and what they are ready, willing and able to do for him. For example a lot of the Chinese holdings in US treasuries are held in the name of CIC a Chinese SWF the rest of the non-bond US portfolios of CIC are in things like the Blackstone group. China may control 10-25% of the US economy but that would be hard to prove.

 

[Toro]

Discuss

cyclical as expected, we still wind up with a net plus.

I don't like it when people use the stock market to justify this or that politician or policy. Politics, for the most part, only has a tangential affect on stocks. The history of the stock market is marked by long periods of multiple expansion followed by long periods of multiple contraction, no matter who the President or the policy.

Of course, policies do have some affect. Lower taxes may move the market multiple up from 15x to 16x. But if it moves the market multiple up a point in the midst of a secular decline in valuations from 20x earnings to 10x, it doesn't make that much of a difference.

In complete fairness to Bush, he inherited a very difficult time. Stocks were trading at all-time high valuations, and were about to begin a severe secular contraction. The fact that multiples did not stay at all-time high valuations is in no way a reflection on the Bush Presidency.

 

[william the wie]

I don't like it when people use the stock market to justify this or that politician or policy. Politics, for the most part, only has a tangential affect on stocks. The history of the stock market is marked by long periods of multiple expansion followed by long periods of multiple contraction, no matter who the President or the policy.

Of course, policies do have some affect. Lower taxes may move the market multiple up from 15x to 16x. But if it moves the market multiple up a point in the midst of a secular decline in valuations from 20x earnings to 10x, it doesn't make that much of a difference.

In complete fairness to Bush, he inherited a very difficult time. Stocks were trading at all-time high valuations, and were about to begin a severe secular contraction. The fact that multiples did not stay at all-time high valuations is in no way a reflection on the Bush Presidency.

Serious question Toro, I'm currently reading a well documented argument "The Great Inflation and Its Aftermath" by Robert J. Samuelson that in passing raises the question do we ever know whether or why a president is effective?

The thesis is that Reagan's greatest achievement was covering Volcker's back in the war on inflation. Other than the obvious point that such an argument can be factually defended Reagan's defenders never mentioning this accomplishment on boards such as this is also interesting.

Kennedy being idolized after the fact when he was not well thought of while in office is another case in point.

I think this shift of focus over time is underrated. I suspect that for at least 20 years after he leaves office Obama will be seen as a failure even though he has not done or proposed anything out and out stupid.

 

[Toro]

Stock market performance during first two years of a Presidency since 1900.

Bespoke Investment Group - Think BIG - A Near Perfect Pair: The Markets andObama

 

[william the wie]

Stock market performance during first two years of a Presidency since 1900.

Bespoke Investment Group - Think BIG - A Near Perfect Pair: The Markets andObama

Now the big question are the first two years indicitive of the last two years?

 

[Toro]

Stock market performance during first two years of a Presidency since 1900.

Bespoke Investment Group - Think BIG - A Near Perfect Pair: The Markets andObama

Now the big question are the first two years indicitive of the last two years?

If you know, please PM me.

I'll even pay $1 for that information...

 

[william the wie]

Look in "the stock trader's almanac" but to me 41.6% (76/178) bad years if 2009 was a marginally up year as I recall strikes me as a random distribution with a lot of latency (good and bad years tend to run in streaks). I tend towards the weak form of the efficient market hypothesis with mediation by the more or less Austrian Business Cycle because that would explain the latency.

An aside on banking I think Bernancke's theory of banking is unrealistic. Since non banks can and do create money through the issuance of stocks and bonds to buy firms and assets I am not an ABCT purist but I don't buy the conventional theory of banking at all. Even if insurance companies and pension funds are treated as the banks they in effect are but then hedge funds, private equity funds, money market funds and SWFs are not that strikes me as nuts. Any money creation through financial or structural leverage is money creation. OPM or OPW (McDonald's franchise system based on other people's work) or OPF (insurance profits from other people's fear) or OPG (derivative income based on other people's greed) all creates money from nothing although the chicks for free bit still escapes me.

Still Bernancke and Geithner operate on a slightly modified banking theory that says OPM and sometimes OPF create money from nothing but OPW and OPG don't. Therefore I expect meltdown II before the 2012 election and that it will persist into 2013 but probably not 2014.