I nicked Bloomberg for a story in March calling the stock-market swoon an “Obama Bear Market.” Now it’s saying there’s an “Obama Stock Advance.”
Ding it for that, too.
That relatively quick turnaround ought to show you how foolish it is to peg stock market moves to a president. That’s especially true for its story in March, when Obama was just six weeks into the worst economic inheritance of any new president in seventy-six years.
That “Obama Bear Market” actually began in October 2007, when Bush still had fifteen months left in office. To further illustrate the folly of such pronouncements, the Dow hit bottom on March 9, just three days after the Bloomberg “bear” story. So began the present bull market.
Calling the current bull market an “Obama Stock Advance” isn’t quite as utterly wrong, because it did begin when he was actually president. And it’s somewhat arguable at least (though you won’t hear me saying it) that his administration’s policies helped stem the decline in confidence that sent stocks spiraling.
But as Barry Ritholtz says, it’s still not right:
As we have noted tine and again, this was neither an Obama sell off nor an Obama rally. Who the president is at any given moment is mostly irrelevant to the machinations of the markets. The sell off that began in late 2007 and bottomed in March 2009 was the culmination of years, perhaps decades of decisions made by traders, bankers, bureaucrats, pols, and others.
Correlation doesn’t imply causation, especially since markets are unfathomable things with trillions of variables. You can’t know when they’re going to turn and you can’t really know why they turn, even in hindsight.
Bloomberg says:
No new president since Franklin Roosevelt has seen a bigger rally than Obama.
It’s no accident that FDR is the other president here. He inherited a disastrous economy with a stock market that had plunged. A market or a stock is much more likely to jump sharply if it’s already been falling sharply.
This Obama-bull-market thing is a hook for a story that says investors are still sitting on a ton of cash that can fuel a further stock-market rally.
When considering that, you’d do well to take under advisement the return on the Dow since Bloomberg declared an “Obama Bear Market”: 48 percent.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.