If this is Socialism, call me Comrade

No politics or partisanship here, “just the facts ma’am”.  The stock market as measured by the S&P500 is up just about 50 percent since President Obama’s inauguration to today’s close.   Only Eisenhowser comes close, but not even in the same zip code.   A 50 percent stock move does a lot of “spreading the wealth around” and Joe the Plumber’s pension is in much better shape today than it was in November 2008!

Sure, sure, there are a  ton of reasons to explain the differences, but this is politics folks!    A CapEX spending led economic acceleration and pick-up in hiring in 2011, which usually follows such a strong equity performance,  will make the President look unbeatable same time next year, in our opinion.  Stay tuned.



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17 Responses to If this is Socialism, call me Comrade

  1. Pingback: If this is Socialism, call me Comrade | The Big Picture

  2. Ruschem says:

    Wow. This post almost made me want to go back in time and restore the Soviet Union where I spent first 38 years of my life. Call yourself comrades or anything you want but don’t give me more socialism. Using stock market return as yardstick to prove that policies work and that one president is better than other is plain wrong. Can you say that Bush 41 was a better president than Clinton because stock market grew more? Was Comrade Brezhnev a good communist ruler because the quality of life did improve under his rule. And you know what, I bet the fastest economic growth the Soviet Union and Russia for that matter have ever experienced was under Comrade Stalin. Was he good? He started at a very low point and used all the wrong ideas and methods. But if we only judged by economic growth we should have said that he was the best. If we used the healthcare as measure, Comrade Castro would have been the winner. Not considering the starting point and ways the success was achieved is just wrong. For a fuller picture you should have the unemployment chart included as well.

    As far as Joe the Plumber is concerned, does he even have a 401K? Even if he had one, he might have spent it because he does not have a job. But if he has the savings account he got zero and will be getting zero for a long time. He was robbed for you to enjoy the stock market gains. Here is where we need to start talking socialism. Exact same thing was happening in the Soviet Union. The actual prosperity, including big Swiss bank accounts, was only among the party elite, their families and close friends.

  3. Pingback: Graphs: Obama vs S&P 500 | motorcitytimes.com

  4. jack adams says:

    Actually this is a great chart which “proves” you can prove anything if you pick the right statistic. I have equal “proof” that serving coffee on an airplane causes turbulence. I saw it happen once again yesterday, just like last year and the year before. But it is good to see that BushI did so well with the third highest return on the chart. His second term was legendary.
    What socialist nonsense.

  5. macromon says:

    Hey, no politics! We’re not proving anything, stating fact.. The title was just a play on words and a little poke at those who call Obama a socialist.. And Jack I think you totally misread the meaning of the article. Nevertheless, thanks for taking the time to comment.

  6. Ruschem says:

    No politics, just facts: this post is sloppy. When someone repeatedly tells me “no politics just facts” and pokes at those who call Obama socialist, somehow I smell politics. And what about real facts? Is that a fact what you say about Joe, his wealth and 401k – do you actually know who and in what proportion is the beneficiary of the stock market advance? What does any President has to do with stock market action? Is that a fact that Presidents can be credited for market ups and downs?

  7. macromon says:

    Ruschem, You make good points. Maybe we should have left Joe the Plumber out of it. But the facts are the S&P500 is up almost 50 percent. Why? We can’t tell you and I don’t think anyone can either. Somehow confidence was restored and situation was, thank goodness, stabilized. We’ll leave it for the politicians to explain and take credit. Thank you for comments.

  8. Chico says:

    Alot of lather (blather?) being generated by the post. The issue is will the populace give O any credit for an improving economy/stock market? Also would an inflationary brush fire turn O into Jimmy C?

    O may or may not benefit from the “useful idiots” or populist believers…time will tell.

  9. Highgamma says:

    I think I’m going to use this graph the next time I teach statistics.

    I tell my students often that when people say that they are “just giving you the facts” that they are often feeding you a bad model. The bad model here is that market participants change their view of the market based upon the president (and not other variables) and that they change their view on the day the president is sworn in (and not on the day that they begin to believe the person will be elected president).

    Clearly your facts are accurate, but your model is clearly lacking. As a simple retort, let’s look at the level of the stock market at the time when Obama passed McCain in the polls for the last time, about September 18, 2008. There are lots of good analyses that shows that the market incorporates expectations of events into prices, not the events themselves. So let’s use the S&P 500 on that date which was 1208. Now consider when the Republicans began to look like they’d take the House of Representatives in the midterms (another expectation), sometime in January 2010. At month end, the S&P was a 1073.

    Obama doesn’t look so good now with a -11% price return.

    But I have just as bad of a model. Clearly, Obama did not cause the financial crisis and his policies likely had some impact on our better economic conditions this year. We both need to form a hypothesis that is falsifiable, takes into account all of the relevant variables, and makes sense. Neither of us have done that.

    • macromon says:

      Highgamma, Thanks for comments. Greenspan said once, “There is, regrettably, no simple model of the American economy that can effectively explain the levels of output, employment, and inflation.In principle, there may be some unbelievably complex set of equations that does that. But we have not been able to find them, and do not believe anyone else has either.” I think it applies here also why confidence was restored and the situation stabilized since Obama took office. We actually did a study on the S&P500 and results of the mid-terms, the results were counter-intuitive (the link is below). Being and old econ teacher, myself, I suggest you also teach your students about confirmation bias. Show them the raw data/chart, ask them to write up an analysis, then solicit their political party/bias, etc.,, Thanks, again for taking the time to comment. Happy New Year. Cheers!

      https://macromon.wordpress.com/2010/11/06/all-things-correlated-sp500-and-the-midterm-elections/

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