Full Version: Bush and the Stock Market
QUOTE
Blue chips posted a triple-digit gain Wednesday and the Nasdaq closed above the 2,000 level for the first time in four months after President George Bush won a second term of office.
The market however surrendered some of its early gains as investors locked in profits and oil prices spiked higher in late-day trading.
The market hits an all time high due to status quo not changing. What is interesting is that the price of oil has been falling down over the last month and, as the market showed to today, "oil prices spiked higher." The market rise is do to 3rd quarter earning looking better then predicted and an increase in oil.The market however surrendered some of its early gains as investors locked in profits and oil prices spiked higher in late-day trading.
QUESTIONS:
- Was the 3rd quarter earnings silent in the media due to it showing a strong Bush Economy, or are the earnings not as strong as the market shows?
- Is the rise in the price of Oil a sign that Bush is tied to the oil stock, or a fear that Iraq will go worst under Bush possible ending surplus barrels?
There are several things that are just wrong here...
No, it hit a SESSION high. Kind of like it hits a SESSION high every day that the market is open. Now, on to your questions.
Was the 3rd quarter earnings silent in the media due to it showing a strong Bush Economy, or are the earnings not as strong as the market shows?
Assuming you mean "was the media silent about the 3rd quarter earnings..." then the answer in the first case is no. However, I don't know what you hope to accomplish by bringing up that particular question because the last time I checked, the third quarter earnings for a lot of companies are just now being released. It's hard for the media to report on news that doesn't exist yet. (Snide commentary about media fabrications aside.) More to the point, earnings reports in the link you provided are mixed, and don't demonstrate a strong Bush economy.
Is the rise in the price of Oil a sign that Bush is tied to the oil stock, or a fear that Iraq will go worst under Bush possible ending surplus barrels?
At the moment Iraq isn't exporting much oil anyways, so Bush's re-election won't have much of a price impact unless he actually outlines a specific policy that would either alter or confirm current production projections. Nor does it have anything to do with Bush's connections to Big Oil. The rise in oil can be attributed to fears over heating demands in the coming winter (as colder weather sets in) and various other factors. Now, this is all explained again in the link you provided, so I'm not sure where you're going with the question.
No, why then do they mention the re-election? Well quite simply investors LOVE stability and predictability. His re-election means that economic and trade policy is likely to be stable, making it 'safer' to purchase oil. That being said, Bush's energy policy does favour the oil industry to a degree.
QUOTE
The market hits an all time high due to status quo not changing.
No, it hit a SESSION high. Kind of like it hits a SESSION high every day that the market is open. Now, on to your questions.
Was the 3rd quarter earnings silent in the media due to it showing a strong Bush Economy, or are the earnings not as strong as the market shows?
Assuming you mean "was the media silent about the 3rd quarter earnings..." then the answer in the first case is no. However, I don't know what you hope to accomplish by bringing up that particular question because the last time I checked, the third quarter earnings for a lot of companies are just now being released. It's hard for the media to report on news that doesn't exist yet. (Snide commentary about media fabrications aside.) More to the point, earnings reports in the link you provided are mixed, and don't demonstrate a strong Bush economy.
Is the rise in the price of Oil a sign that Bush is tied to the oil stock, or a fear that Iraq will go worst under Bush possible ending surplus barrels?
At the moment Iraq isn't exporting much oil anyways, so Bush's re-election won't have much of a price impact unless he actually outlines a specific policy that would either alter or confirm current production projections. Nor does it have anything to do with Bush's connections to Big Oil. The rise in oil can be attributed to fears over heating demands in the coming winter (as colder weather sets in) and various other factors. Now, this is all explained again in the link you provided, so I'm not sure where you're going with the question.
QUOTE
President Bush's reelection, tight U.S. distillate supplies, as well as a special shareholders meeting at Russia's Yukos (Other OTC:YUKOF.PK - News) to discuss a possible bankruptcy offset a significant jump in last week's crude inventories.
No, why then do they mention the re-election? Well quite simply investors LOVE stability and predictability. His re-election means that economic and trade policy is likely to be stable, making it 'safer' to purchase oil. That being said, Bush's energy policy does favour the oil industry to a degree.
QUOTE(yehoshua @ Nov 3 2004, 07:36 PM)
QUOTE
Blue chips posted a triple-digit gain Wednesday and the Nasdaq closed above the 2,000 level for the first time in four months after President George Bush won a second term of office.
The market however surrendered some of its early gains as investors locked in profits and oil prices spiked higher in late-day trading.
The market hits an all time high due to status quo not changing. What is interesting is that the price of oil has been falling down over the last month and, as the market showed to today, "oil prices spiked higher." The market rise is do to 3rd quarter earning looking better then predicted and an increase in oil. The market however surrendered some of its early gains as investors locked in profits and oil prices spiked higher in late-day trading.
QUESTIONS:
- Was the 3rd quarter earnings silent in the media due to it showing a strong Bush Economy, or are the earnings not as strong as the market shows?
- Is the rise in the price of Oil a sign that Bush is tied to the oil stock, or a fear that Iraq will go worst under Bush possible ending surplus barrels?
I am assuming that you are implying that under Bush the stock market would out perform a adminstration under Kerry or any Democrat.
QUOTE
Two different relationships between the stock market and president cycles are examined. The
political policy theory suggests that the policies of the Democratic and Republican parties
influence the performance of the stock market. Evidence from prior studies report that the
annual stock market returns (after 1927) are greater during Democratic administrations then in
Republican administrations. I show that this result is not robust to earlier time periods. Stock
returns during Republican administrations outperform those in Democratic administrations pre-
1927. The full time-series history reveals that stock market returns are not different between the
two political parties. Alternatively, the social mood theory suggests that the mood of society is
reflected in the performance of the stock market. In this hypothesis, the stock market
performance predicts who will be elected President. The gain in the stock market 36 months
before the election has significant predictability for the electoral votes, popular votes, and margin
of victory (loss) for the incumbent party. Stock market returns are more likely to predict
presidential elections then elections are to predict the stock market.
Also the DJIA is lower now than on Jan. 1,2004. It is a myth that the stock market does better under Republican. Of course that is another falsehood that Bush like to impress upon the people.
Also the NASDAQ is a few points lower than Jan. 1,2004.
The stock market always goes up after the president is elected. This is because investors are waiting for which stocks they should buy. Has nothing to do with Bush...Repub or Dem...it has to do with what each candidate would probably push. Investors were just waiting to see where to put their money.
QUOTE(lederuvdapac @ Nov 3 2004, 07:43 PM)
The stock market always goes up after the president is elected. This is because investors are waiting for which stocks they should buy. Has nothing to do with Bush...Repub or Dem...it has to do with what each candidate would probably push. Investors were just waiting to see where to put their money.
Actually:
QUOTE
The Dow Jones Industrial Average has ended higher on the session after only two of the last six presidential races, according to data compiled by Dow Jones Indexes and Wilshire Associates
Heh, did anyone read that article that Yehoshua posted? That being said, you are right Leder, in that the leader elected does impact which sectors benefit; in this case oil and pharmaceutical.
QUOTE(Ultimatejoe @ Nov 3 2004, 08:50 PM)
QUOTE(lederuvdapac @ Nov 3 2004, 07:43 PM)
The stock market always goes up after the president is elected. This is because investors are waiting for which stocks they should buy. Has nothing to do with Bush...Repub or Dem...it has to do with what each candidate would probably push. Investors were just waiting to see where to put their money.
Actually:
QUOTE
The Dow Jones Industrial Average has ended higher on the session after only two of the last six presidential races, according to data compiled by Dow Jones Indexes and Wilshire Associates
Heh, did anyone read that article that Yehoshua posted? That being said, you are right Leder, in that the leader elected does impact which sectors benefit; in this case oil and pharmaceutical.
I remember when Bush was elected in 2000 that it was mentioned that the pharmaceutical companies would benefit. That was not the case from Jan 2001 to the present.
Following are stocks prices from the 5 largest drug companies in the USA in Jan 2001 and now
Jan 2001 Now
Pfizer 42.00 39.45
Merck 85.00 27.87
Johnson and Johnson 51.00 59.45
Schering-Plough 50.00 17.91
Bristol-Myers Squibb 65.00 23.76
As you can see only 1 company has a higher stock price .
Apparently the drug companies may want to get a paritial refund on their 2000 election campaign giving.
QUOTE
Evidence from prior studies report that the
annual stock market returns (after 1927) are greater during Democratic administrations then in Republican administrations.
annual stock market returns (after 1927) are greater during Democratic administrations then in Republican administrations.
The stock market is also less volotiale under Democrats, and the GDP growth is higher.
http://money.cnn.com/2004/01/21/markets/election_demsvreps/
QUOTE
But here's Wall Street's strange little irony -- studies show the stock market performs better and tends to be less volatile when Democrats are in power.
QUOTE
Well quite simply investors LOVE stability and predictability.
Exactly.
QUOTE
"It thus seems that the difference in realized returns can be attributed to the market being systematically positively surprised by Democratic policies," the professors wrote.
...
"Our model predicts that rational expectations for higher interest rates under left-wing administrations decreases demand for stocks among traders," the professors write. "This decrease in demand leads to a decline in stock price volatility not only during the incumbency of left-wing governments, but also when traders expect the left-wing party to win elections."
Alternately, the statistics also show that expectations of lower inflation under right wing administrations make the market more volatile. This is because traders increase their inflow of capital and investment into the stock market when they believe the interest-rate environment is more friendly for stocks. More money at work translates into more volatility in the markets.
...
"Our model predicts that rational expectations for higher interest rates under left-wing administrations decreases demand for stocks among traders," the professors write. "This decrease in demand leads to a decline in stock price volatility not only during the incumbency of left-wing governments, but also when traders expect the left-wing party to win elections."
Alternately, the statistics also show that expectations of lower inflation under right wing administrations make the market more volatile. This is because traders increase their inflow of capital and investment into the stock market when they believe the interest-rate environment is more friendly for stocks. More money at work translates into more volatility in the markets.
In other words the people in the market expect less stock market friendly policies from Democrat's. Therefore causing less volatility and "systematically positive" surprises causing an increase in "realized returns".
This is possibly one of my favorite subject MONEY and RETIREMENT LOL 
First off, poeple of middle income, of which I am the largest demograph (last I read in some of my mutual fund propoganda
) in the "middle income retirement investor"- 40 years old, over 60K a year in income, a "work" sponsored retirement (I actually have PERS and SBS instead of Soc Sec) and a white male- we don't trust the market too much right now. That is why it has been such a bear market IMO.
Guys like me are in it for the long haul, and you really need to make 12% or more per year for a mid to high risk portfolio.
As soon as Bush was annointed president back in 2000, I started liquidating all my stocks and mutual funds- It is pretty well known, regardless of political persuasion, that the markets do better for Dems than they do repubs- so, I got lucky by that rule of thumb, before 9/11, I was completely divested of all mutual funds EXCEPT for my mandatory retirement accounts (which is funny- all the talk about privatizing Soc Sec, but it forces poeple into the stock market, a very bad idea IMO as well, but another topic)
I am almost completely invested, in my "more risk" part of my investments (not Fed bonds or CDs or what have you, with low interest rates but guarunteed returns) - in real estate. I forsee a major recession due to the incompetence of this administration.
Alot of the guys in my circle seem to feel the same way (most are real estate developers, so big republican base here). The interest rates are going up, and should be sky high in a couple of years, perhaps not to Carter-Reagan standards, but at the very least putting a major damper on first time home buyers. Also, with the decrease in revenue due to the GW incompetence as well, there will be more burden on state and local goverments to fulfill the needs of it's populace, so taxes will go up. The GW "tax cut" was a tax increase for me, as the difference in revenue, and the underfunded mandate of NCLB increased my property taxes more than the so-called tax cut.
I believe this feeling is what is driving the income property building movement across the country- tenancy for rentals will be booked solid soon IMO. In fact, I am putting my money where my mouth is on this one- I have earned 24% per year on my investment since 2000 since getting out of stocks!
All of my investment strategy for my family is based on GWs lack of competence LOL
So, in a long winded way-
1. Was the 3rd quarter earnings silent in the media due to it showing a strong Bush Economy, or are the earnings not as strong as the market shows?
I have to say "are you kidding me?" Even the staunchest GW supporters don't use the words "strong Bush economy" LOL
2. Is the rise in the price of Oil a sign that Bush is tied to the oil stock, or a fear that Iraq will go worst under Bush possible ending surplus barrels?
I come from an "oil" state- and believe me, we are loving oil prices right now!! Our Republican ran goverment (at every level almost) has never had a long term fiscal plan, and don't have to make one now that we have all this oil money LOL
You are seeing here, IMO, a simple case of the world dwindling supply of oil, with an increasing world population. Sure, there are some other short term factors like Iraq, but oil is a finite resource, and our energy needs are increasing. No matter how much we drill, no matter how much we conserve, we, probably in my lifetime, will run out of oil as a viable economic energy source. Oh, I don't mean we will run out completely, but soon it will be priced out of being a competitive energy source.
In this, GW has no blame, other than his inability to see the big picture, meaning, past oil company buddies profits.
First off, poeple of middle income, of which I am the largest demograph (last I read in some of my mutual fund propoganda
) in the "middle income retirement investor"- 40 years old, over 60K a year in income, a "work" sponsored retirement (I actually have PERS and SBS instead of Soc Sec) and a white male- we don't trust the market too much right now. That is why it has been such a bear market IMO. Guys like me are in it for the long haul, and you really need to make 12% or more per year for a mid to high risk portfolio.
As soon as Bush was annointed president back in 2000, I started liquidating all my stocks and mutual funds- It is pretty well known, regardless of political persuasion, that the markets do better for Dems than they do repubs- so, I got lucky by that rule of thumb, before 9/11, I was completely divested of all mutual funds EXCEPT for my mandatory retirement accounts (which is funny- all the talk about privatizing Soc Sec, but it forces poeple into the stock market, a very bad idea IMO as well, but another topic)
I am almost completely invested, in my "more risk" part of my investments (not Fed bonds or CDs or what have you, with low interest rates but guarunteed returns) - in real estate. I forsee a major recession due to the incompetence of this administration.
Alot of the guys in my circle seem to feel the same way (most are real estate developers, so big republican base here). The interest rates are going up, and should be sky high in a couple of years, perhaps not to Carter-Reagan standards, but at the very least putting a major damper on first time home buyers. Also, with the decrease in revenue due to the GW incompetence as well, there will be more burden on state and local goverments to fulfill the needs of it's populace, so taxes will go up. The GW "tax cut" was a tax increase for me, as the difference in revenue, and the underfunded mandate of NCLB increased my property taxes more than the so-called tax cut.
I believe this feeling is what is driving the income property building movement across the country- tenancy for rentals will be booked solid soon IMO. In fact, I am putting my money where my mouth is on this one- I have earned 24% per year on my investment since 2000 since getting out of stocks!
All of my investment strategy for my family is based on GWs lack of competence LOL
So, in a long winded way-
1. Was the 3rd quarter earnings silent in the media due to it showing a strong Bush Economy, or are the earnings not as strong as the market shows?
I have to say "are you kidding me?" Even the staunchest GW supporters don't use the words "strong Bush economy" LOL
2. Is the rise in the price of Oil a sign that Bush is tied to the oil stock, or a fear that Iraq will go worst under Bush possible ending surplus barrels?
I come from an "oil" state- and believe me, we are loving oil prices right now!! Our Republican ran goverment (at every level almost) has never had a long term fiscal plan, and don't have to make one now that we have all this oil money LOL
You are seeing here, IMO, a simple case of the world dwindling supply of oil, with an increasing world population. Sure, there are some other short term factors like Iraq, but oil is a finite resource, and our energy needs are increasing. No matter how much we drill, no matter how much we conserve, we, probably in my lifetime, will run out of oil as a viable economic energy source. Oh, I don't mean we will run out completely, but soon it will be priced out of being a competitive energy source.
In this, GW has no blame, other than his inability to see the big picture, meaning, past oil company buddies profits.
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