- Not Just one but, according to CNBC, many analysts are sounding a warning!
- Mr. Biden has promised to roll back the Trump tax cuts (a big plus for earnings the last couple of years)
- Should you sell if or before the Dems take over?
- History tells us you shouldn’t let your politics dictate your investment policy
- Don’t let the media and your personal political biases lead you to bad investment decisions!
The Myth Continues
The myth– Democratic administrations are bad for stocks and bad for the economy.
Please! Just the facts Ma’am
Here is the record (FACTS) since 1953–Jan 1, 1953 — S&P 500 = 26.17
|Administration||dates|| S&P 500 at end of term |
(January 1, of last month)
|D. Eisenhower (R)||1953-1961||58.30||+ 122%|
|John Kennedy (D)|| 1961- |
|Lyndon Johnson (D)|| 11/22/63|
|Richard Nixon (R)|| 1969|
|Gerald Ford (R)|| 8/9/74|
|Jimmy Carter (D)||1977-1981||133.80||+28.9%|
|Ronald Reagan (R)||1981-1989||285.40||+113.3%|
|G.H.W. Bush (R)||1989-1993||435.23||+52.5%|
|Bill Clinton (D)||1993-2001||1335.60||+207%|
|G.W. Bush (R)||2001-2009||865.00||-35%|
|Barack Obama (D)||2009-2017||2275.12||+163.0%|
|Donald Trump (R)||2017-||3083.76 (6/25/20)||+35.5%|
for those of you looking for more proof I am providing a link to a USA Today article detailing Dow Jones Industrial average performance during every administration for the past 100 years. https://www.usatoday.com/story/money/2018/12/26/stock-market-performance-dow-under-every-president-past-100-years/38775295/
Here is some current media fluff promoting the myth
This headline is a bit misleading. Wall street execs are not necessarily bracing for Biden but they are beginning to believe the end of a Republican administration may be at hand and are in the process of changing horses … quietly beginning to lend support to the Biden camp.
“The preparation for a Biden presidency ranges from privately warning clients and affluent friends that their taxes will soon be going up, to veteran executives speaking to people linked to Biden out of hopes they can have access to the White House. Others are donating more to Biden’s campaign.”
“Biden’s big lead in the polls could be partly behind market’s drop …” (CNBC–6/23/2020)
This was stock market illuminati Jim Cramer’s admonition to his flock: “This to me is a Biden move. When I see across the board selling today, that’s Biden … he sounds like another president that you get that is not favorable to capital. If that’s the case, I want to have a little cash.”
“Not favorable to capital,” sounds like Bill Clinton. Oh, yes, the guy on who’s watch the S&P 500 posted a 209% gain was considered at the time of his election in 1992 to be a danger to the market and the economy.
The morning after the 1992 election I had a client/friend (you could have friends then of different political persuasions) who, knowing of my ‘left’ leanings called to say, “I hope you’re happy now. The market and the economy are really going to take a hit.”
The rhetoric was even worse when it came to Obama (another guy who was not a friend of capital and clueless on all things economic) and it persisted throughout his entire administration, even after a 73% increase in the S&P 500 during his first term coming from the depths of the financial crisis. This still was not enough to give any credibility to the president.
A True Story and good reason not to let political ideology chart your investment course.
In early 2013 I was visiting an institutional client in the St. Louis area. The market had begun to roar again following a brief setback on the reelection of President Obama. We talked about the election, the market and what some of his clients did during the run up to the election and following.
In October 2012 he related that he had done a routine marketing trip to clients in the southeastern part of the country. These were successful people, professionals, doctors, lawyers and business owners. The consensus of this group regarding the outcome of the election was that Mitt Romney was going to be the victor, but in the unlikely event that he did not win the presidency they would be selling stocks. Well, we all know the outcome and, according to my client, his clients were true to their word. They sold. By January 2013 the market had moved to a new all-time high. Subsequently, his clients began to inquire about the possibility and desirability of increasing their exposure to equities.
Why were these clients so fearful? My only conclusion can be that they were not convinced by the observable facts. The economy was in recovery mode. The market was doing fine. They chose, however, to follow the constant drum beat of media and political sources that said things were not so good and would get worse if Obama were to be returned to office. They chose to ignore the facts and follow voices that were aligned with their own ideology. It cost them, just as those who sold on the election of Donald Trump paid a price.
What are your thoughts?
As we approach election season it is guaranteed that similar fears will be stoked about a potential transition of power between the parties. Think! Do a rational examination of the facts before you leap and during the process leave your ideology at the door.
The information presented in kortsessions.com represents my own opinions and does not contain recommendations for any particular investment or securities. I may, from time to time, mention certain securities for illustrative purpose, names where I personally hold positions. These are not meant to be construed as recommendations to BUY or SELL. All investments and strategies should be undertaken only after careful consideration of suitability based on the risks, tolerance for risk and personal financial situation.