What Happens to the Stock Market if Obama Becomes the CEO of America?
It's easy and counterproductive to politicize the stock market: Democrats would say it's plunging due to eight years of Republican leadership. Republicans would counter that the free-falling stock market is pricing in a Democrat in the White House.
Research based on the past 80 years shows that American stock markets have performed better under Democrats, but the Republicans would correctly point out that the result is distorted due to the Internet revolution that took place during the Clinton administration.
The first lesson in statistics: Correlation does not necessarily imply causation. Usually, it would be incorrect to assume that a Democratic or Republican administration would push the stock market in a certain direction. But this time it's different.
I'll be the first to admit that it is pointless to predict the long-term outlook for the stock market, but I believe we are in for a strong bull market if Obama becomes president. Do I think that he is the answer to all of our problems? Most definitely, no. I don't want to put Obama on a pedestal, but I'm feeling bullish as an investor due to the underlying trends that are fueling his success. The same forces that are engineering an Obama victory will repair the American economy.
I am a South African working in the United States and I will probably apply for citizenship if Obama is elected. It's not because I want to live in a country with someone like Obama at the helm. It's because I want to live in a country that can go from the tyranny of George Walker Bush to the promise of Barack Hussein Obama in the space of eight years. It's because I want to live in a country where people can admit that something is wrong and fix it. It's because I want to live in a country where people believe in real change.
These are the bullish forces that will shape the outlook for the stock market. Think of a struggling public company: if the CEO is removed by the board, the stock price tends to shoot higher because investors reward companies that own up to their problems and fix them.
America depends on foreigners to fund its trade deficit, and these foreigners continue to do so because they still hunger for the "idea of America" -- an open, optimistic, and revolutionary economy that can provide a solid return on investment. The mere nomination of Obama has greatly improved America's image abroad, and may well inspire foreigners to continue to finance the American trade deficit until it is balanced.
Ralph Waldo Emerson told a meeting of the Mercantile Library Association in 1844 that "America is the country of the future. It is a country of beginnings, of projects, of vast designs and expectations." It has been a lost decade for U.S. stocks because Bush destroyed that America. I'll be betting on a reversal when Obama is given the opportunity to rebuild the American dream.
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OBAMA WILL RAISE CAPITAL GAINS TAX...!!
i know i know...!! the conservatives are using that tactic again. say what ? i would be happy with that too.
How much capital gains have investors had under Bush. In case you didnt know the stock market is stuck for the last 8 years, and down 42% for the year.
Who cares about capital gains tax when there is NO capital gains :).
give me a democrat president like Clinton so we can party again like 1999-2000 baby :). you can tax me as much as you want, but gimme the dow going up 200 points a day :)
You're right. With the amount of capital "losses" this year, a large number of people won't be paying capital gains for the next several years so a cap gains increase won't make a bit of difference.
This will be more fodder for Rush when he talks about "Obama worship". I know you said you tried not to "put Obama on a pedestal", but that's what you did. I'm a realist, so let's get this straight:
The stock market is the stock market, the white house is the white house. I'm a Republican who will be enthusiastically supporting Barack Obama this year, but not because I think he's going to fix my 401(k) (or 403(b) as it happens)... I have many other, good, valid reasons to vote for him.
It is what it is... it's a global recession.
If the country is "like" a corporation, what are we? "Like" employees? Customers? Stockholders? Excess inventory? Assets? Liabilities? Can we get outsourced? I remember a poem from communist East Germany in which the government complains about the people and the poet sardonically suggests that the party dismiss the people and get a new one.
There are undoubtedly certain overlapping skills one needs to be CEO of a large corporation and President or Prime Minister of a large country. That's all. The business model treats people like crap, don't extend that metaphor to the country. The people and the land ARE the country. There is no other bottom line than the welfare of both. Maybe we should turn it the other way and start thinking of corporations as countries and force CEO's to focus on the well-being of the overall concern over pleasing the stockholders and Wall Street analysts.
I don't know what will happen to the stock market if Obama wins. As Obama is promising higher Capital Gains taxes and more taxes on corporations I can kind of suspect some large drops in the market.
Ok, Barry Cult members, now spin out a good yarn how the promise of raising taxes will make the market bounce.
Obama might raise the long term cap gains tax, but not much. He will not raise taxes on corporations as they are already disadvantaged because of high tax rates as it is. Many Democrats and Republicans alike are favoring a corporate tax cut of some sore- it is not a partisan issue, although it may sound that way in the campaign.
A lot of the current problem arises because of the idea that the president of a country should act like a CEO. Let's stop this nonsense. The past two decades have made it clear that a CEO's job is to prop up the present of a company -- at the expense of its future, if necessary -- for the gain of the board, not the shareholders. That's not how a democracy should act.
I am in the new homesales business in Houston. here the economy's still rather strong, since here there hasn't been crazy speculation on home prices like in Florida, California, etc. However, sales have been slow- but peculiarly, moreso because of the publicity. Buyers want to see when prices bottom out in lower to mid-level homes. High end homes sell well, but some high end builders are struggling.
It gives someone paying close attention to the market here an opportunity to see closer how the market's been heading. Many of us've known quite plainly that the lack of regulation's been a key factor in this whole mess, especially when you have people the last several years coming from Cal. freaking out, seeing a home here going for 250K that would go for close to 1 million in California, closer in a city. Easy to see there's something wrong with this picture.
Although most of us here in the homebuilding industry are conservatives because of the building business environment, I can tell you there's a large proportion of people in the business who CAN"T WAIT AND PRAY FOR OBAMA TO WIN THIS ELECTION.
Those of us who know what's going on remember when Clinton was president, how in spite of the way republicans screamed he would raise taxes, knew that was just their fearful rants.
We'll take Bill Clinton's, or especially Obama's, economy over George W. Bush's ANY DAY !!!
Obama/Biden 08 !
If you didn't live through the Texas oil bust - you're in for a bad surprise. Sorry. Get out while you can.
Clinton DID raise taxes. As soon as he was elected; after promising not to. Just like Obama is doing now.
Democracies don't have CEOs.
I totally agree with Eben Esterhuizen.
The Obama Movement will boost the USA economy and will energize the USA future internationally all the way.
Under Obama the dollar will rise in relation to the world's currencies and the world idea of America will match with the "American Idealism" for which foreigners like me and Eben have moved to USA for.
We in America live to be part of a planet based on a social concept that is called "America", which started when America was founded, and will keep getting closer to the "American Reality" with Obama.
How do you figure the dollar will rise under and Obama administration? I think the dollar will start to weaken some months to a year after the financial crisis abates no matter who is President.
Speaking as someone who cherishes the idea of democratic socialism in the United States, I certainly hope so. Democratic socialism will not work without a strong capitalist component.
Cheers,
Jack
Correct, except you should have stopped at "Democratic socialism will not work".
Regarding becoming a citizen because the country went from George Walker Bush to Barack Obama can also be interpreted as going from the 'frying pan into the fire'. The American public has been very foolish in their living habits for many years in addition to the greed and corruption of Wall Street and DC. They don't have any savings, in fact, on average they have negative savings. The have been living on credit cards, taking equity out of their homes for who-knows-what, borrowing on sub-prime loans to buy houses they couldn't afford, driving gas hog SUVs when the price of gas was likely to go up at any time, oblivious to the fact that jobs were being outsourced and benefits cut back by companies and job security isn't what it used to be, yet they continued to shop.
I have no sympathy for those folks who were at Starbuck's everyday talking on their iPhones who ended up losing money in their 401(K)s. Too bad. That's not how their parents helped build the country in the years after WWII. Yet, Obama is making promise after promise. Is he telling people to save money, cut back on the credit cards and build themselves a stable, secure future or to just 'hope' and 'hope for change' and 'tax cuts' so they can go to the mall. Biden says paying taxes is patriotic but Obama is promising tax cuts. Sounds contradictory.
You are right, but it is also true that leadership matters. And when you have the leader of the country spending on his whims and putting it all on his Chinese credit cartd, they all have a pretty bad example to follow.
The more people cut back on spending the more the economy will weaken. The negative savings rate is misleading, even bogus, because it doesn't take into account savings put into 401K, IRAs, and other retirement vehicles. As for "jobs being outsourced" that hasn't been a negative thing for the US overall because unemployment has been very low (those jobs have been more than replaced) and the sheet amount and quality of consumer goods and services available to average folks has skyrocketed over the past decade.
What do "markets" matter when most people are in fear of losing their jobs? I'm willing to bet I'm not alone in that my stocks/401K gains account for about $5000 a year when the stock market is GOOD?? Where do we get the other tens of thousands needed to survive, pay a mortgage or send our kids to college?
Those making the rules and the propaganda are multi-millionaires (at least) and have the kind of disposable capital and financial security to smugly say; "Secure, gainful employment doesn't matter, - just invest wisely!"
I've made sound decisions and even did better than alot of people in my income class and I STILL lost my house because my salary and benefits have been cut 10%(+-) a year since 2003.
We need GOOD PAYING JOBS. I could give a rats ass if the markets collapse, it only hurts the rich and apathetic. Maybe a '29-like crash would be the fresh start that America so badly needs.
Raw Capitalism is slavery, - a cruel, sick joke brought back every few decades to punish those who work hard and reward only the most clever criminals. Keynes economics worked for most people for 60 years, bring it back.
First of all I am sorry lost your house. If you have lost 10%(+-) every year for five years and haven't gotten a new job then you obviously have not been as smart with your decisions as you claim. I open the newspaper and look on the job sites every single day and I see hundreds of thousands of jobs nationwide that are great paying jobs. Just because you don't qualify for them doesn't mean they are not available. It is not the job of the government or wall street to provide you with a good paying job. It is your job to make sure that you maintain or improve your education level to meet the growing demand of the ever changing job market. The days if walking out of high school into a good paying factory job that requires no education are over. There are plenty of great paying jobs in the medical field. In fact many positions, such as nurses and medical specialists, are being filled by foreign workers because not enough Americans qualify for the jobs. Look at the Aerospace Industry. Go to any of the websites such as Northrop Grumman, Boeing, etc. There are plenty of technology jobs. Many of which go unfilled indefinitely because qualified workers can not be found. America does not need a crash of her stock markets. What it needs is for her citizens to take responsibility for themselves.
"Plenty of technology jobs?" I have worked twenty two years as an Oracle database designer and developer at companies like BP, Shell, Wells-Fargo, Nike, and several large Northwest insurance and health care companies. And I have been out of work since July.
The companies I have worked at are FILLED with Indians (not Native Americans). I'm certainly willing to work for $25/hour like they are, but they've taken over middle management of most projects now, and white people need not apply.
Those aerospace jobs you tout are for Masters level aeronautical engineers. A student at an American university with a respectable masters level aerospace curriculum will leave college with a minimum of $150,000 in student loans, unless of course she or he comes from a wealthy family OR is a genius receiving a "free ride". She or he can expect to make about half that in a couple of years, but it's still a huge burden to undertake.
The debt of a new nursing graduate is lower, but so are the rewards.
What America needs is for fortunate citizens like you to step up to the plate and supply the grease to make sure that African American, Hispanic American, and poor American brains are utilized to the fullest. To do this will be hard for incompetent teachers who will have to go and it will NOT be CHEAP. However, it is the only way this nation will be worth anything in thirty years.
Exactly. A couple weeks back I wrote "The Obama Factor" predicting a stock market bounce if Obama is elected. I give my reason here:
http://www.iplanretirement.com/retirementblog/obama-wall-street-bounce/
Let's hope we're correct - and that the markets can hold on for another couple of weeks.
thats a masterpiece my South African neighbour (with a u), great read!
It's 437am and I am still awake crossing the t's and dotting the i's on my article that should be on my blog (http://nationalvision.wordpress.com). You know, I tell you, this Obama frenzy is amazing. Transformational leaders come once in a life time. Can you imagine a country as insignificant as Zimbabwe (whatever dimension you use to define insignificance... GDP, political obscurity, alphabetical listing, etc) is also burning candles throughout the night (since there is no electricity there) just to get an update on the US presidential race hoping for an Obama Victory. i feel sorry for the youthful candidate because the world has tremendous expectations about his role in geo-politics/economics. It's almost as if the US did not have a president these past few years. I think I will literally drag him to Zimbabwe with me come Nov 5, so that he can witness for himself the carnage, the suffering, the misry.... etc that the good people Zimbabwe have been subjected to by a failed leadership
You're a South African wanting to live in a country where people can admit something is wrong and fix it?
What's wrong with South Africa? The Truth and Reconciliation Commission set up there to fix the wrongs of apartheid is orders of magnitude greater than anything the US has managed. Just ask the Nez Perce.
confidence would be restored that an adult was in the white house if Obama wins.
Who's that? Biden?
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