LONG BEACH— We here at the American Missive have been tracking the DOW Jones as a function of Mr. Obama’s success in the polls. The Obama Discount it is called. The theory goes, as a candidate for the presidency appears in the lead, investors adjust their portfolio in hopes to be ahead of the curve. The hope is to risk losing far less than would occur if they stood pat and waited for anti-growth legislation to be enacted by the candidate. Or conversely, be well positioned for substantial gains in the event the pro-growth candidate wins the election. The movement of such adjustments would, theoretically, be mirrored in the political polls. More details may be found here.
In the past election a celebration occurred on Wall Street as a pro-growth president was elected to office. In 2004 the DOW Jones jumped over 100 points on news that the Republicans had won re-election. In 2000 the news was uncertain. Preliminary results foreshadowed a pro-growth presidency but the results were not certified. Gains on the DOW were mixed. On December 12th the election was certified and the DOW closed up, 63 points.
Today the Associated Press reports that investors are scrambling to secure their dollars. The DOW has plummeted over 3% by mid day. Below are the Charts which track the movement of the DOW with Mr. Obama’s rise to the presidency. Do you think there is a reason to believe these two are connected?
TennesseePaul
Stephen VanNuys
Brooklyn Daniel
The Freedom Thinker
The Obama discount is a tough call. We haven’t really taken a position on it on the missive, other than to throw it out there for debate. But the news articles have been breaking the last day or two and there are suggestions these movements have been at least partially caused by fears of Obama. Much is left to be debated though. We still don’t know precisely what Obama is going to do.
But the energy surcharges, the potential for tax increases, and the heavy regulation of the financial sector are almost sure bets- and those won’t be good for the economy.