Posts Tagged ‘Great Recession’

THIRTY PIECES OF SILVER

On August 22, the S&P 500 Index set a record for stock market bull runs (an aggregate annual increase of at least 20%) by reaching 3,453 days. The streak began on March 9, 2009 when the Great Recession pummeled the economy; the S&P closed at 676. On August 23, President Trump told Fox & Friendsthat if he were impeached, the stock market would crash. Really?

Let me run some numbers. This past Wednesday (August 29), the S&P set another new record at 2,914. That’s a 27% increase over Trump’s 18 months in office—roughly 18% annually. That’s good. But over the seven months since last January 26 when the S&P 500 set a previous high, the S&P was up only 44 points—little more than 0.1%.

Now, go back to November 1, 2016 with the presidential election a week off and fewer than three months remaining in Barack Obama’s second term. The S&P 500 closed at 2,165—a 320% increase over the 92 months since the March 2009 low. From that date during the Obama presidency—remember, he inherited a financial collapse from George W. Bush—the S&P climbed nearly 40% a year.

Yes, the bull market continued under Trump. But it began under Obama. Did Obama have a better grip on the economy? Not necessarily. A president can affect the economy through good or bad judgement, but most economists warn that the economy has a life of its own. Raising or lowering taxes, the Fed changing interest rates, running a budget surplus or deficit, regulating or deregulating the financial industry may—or may not—produce corresponding market gains or losses.

Economic trends, domestic politics and world affairs also produce unexpected results. For example, markets often drop during the threat of war then rise when war begins. Investors prefer certainty to uncertainty, knowing when to choose between plan A or plan B. Also, investors—particularly on Main Street—often act irrationally, chasing bull markets and driving up stocks until they’re overvalued and collapse.

If you own stocks in some form—about half of Americans do—and follow them daily, your financial hopes and dreams experience regulars ups and downs. When a president “delivers” positive market returns in the present, you might fear rocking the boat, ignoring historical fact that long-term, markets rise. So here’s a question:

If Congress finds wrongdoing on the part of Donald Trump before or after the Mueller commission releases its report, would you oppose impeachment? The hit to the market—if there is one—likely will be short-term. Remember the dot.com boom? The dot.com bust followed. Then a recovery. Then another plunge. Then another record recovery.

Despite market history, some Americans may heed Trump’s warning. They’ll betray the nation for thirty pieces of silver. Or, depending on their portfolios, a great deal more. All to prop up a facade of short-term stability. That would make a mockery of American ideals.

This nation doesn’t need Donald Trump to thrive. Yes, Americans put him in the White House—albeit with fewer citizen votes than Hillary Clinton thanks to the Electoral College. Still, the United States deserves better. We’re hardly a perfect nation. But we’re far too good to be misled by an egotist who professes faith in Jesus while worshipping the dollar.

I have not computed percentage increases to account for compounding, but the absolute numbers are—pardon the word—facts. This post was vetted by my financial advisor, Ira Fateman of SAS Financial Advisors. Any errors, however, are mine alone.

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“THE ALIBI”—A FABLE

Wearing an orange jumpsuit, Joe follows the bailiff into the courtroom for his arraignment. He sits next to a haggard public defender, who nods. Joe smiles. Sure, he committed the crime. But he knows he won’t be indicted.

Joe admits he came to the end of his rope. He’d worked a good job in a shop manufacturing auto parts. But the Great Recession and foreign competition drove sales down. They let him go. It took a while, but Joe found a new job. For lower wages, yes, but jobs were scarce. His new employer faced the same business challenges, only worse. The company folded.

Joe hated collecting unemployment, but he had a family. And he did look for work. Until he figured there wasn’t anything out there for him and stopped. His wife got a job in a bakery. Minimum wage, no bennies. But something. Joe became a househusband.

He drove the kids to school then his wife to work then picked up everyone after. They once had two vehicles, but his wife’s SUV got better mileage and cost less to insure, so he sold his truck. The money went fast. At home, he cleaned a little, did laundry then watched Fox News. Under Obama, America was in deep trouble.

Once a week, Joe shopped a specialty market with low prices on dented cans, torn packages and produce a little less than prime. He still left cooking dinner to his wife.

No slacker, he occasionally dug up odd jobs to help lower their debt. It kept rising. The economy picked up then got hot. But the way Joe figured, it still left him out in the cold. He voted for Trump.

America being made great again, he reentered the job market. Automation and the skills that went with it had passed him by. When a guy got beat down like he’d been beat down, he just couldn’t get up.

Then the lightbulb went off. One afternoon, he went to the mall. Crowds were smaller given how many people shopped online, but it still contained a nice jewelry store. He reached into his backpack, pulled out a small hammer and chisel, broke a glass case, scooped up expensive watches and diamond bracelets, and walked out. An alarm sounded. He ran. A security guard tackled him. Joe wasn’t worried.

“How do you plead?” asks the judge. Joe’s attorney is about to answer when Joe stands. “Not guilty, your honor. You can let me go.” The judge scowls. “You’ll have your day in court.” Joe smiles. “Don’t need it. If I say I’m innocent, that’s all the proof you need.” The judge tilts her head. “And that works how?”

“Trump’s getting ready to meet Putin in Finland, right? Some U.S. Senate committee just said the Russians interfered with the 2016 election. All of America’s intelligence agencies concluded that before. But Trump tweeted, ‘Putin says the Russian state had nothing to with it.’ He tweets that a lot.” “So?” asks the judge. “So, Russia gets away with it. I’m just saying, I had nothing to do with that robbery, so—”

The judge bangs her gavel. It booms like a rifle shot. Joe grins in response to the resignation on her face when she announces, “Case dismissed.”

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