Stock Trading: Time To Sell The President?

When will it end? The barrage of negative market stories flashing across my computer screen every morning is difficult to bear. With the exception of last Tuesday’s near 300 point rally, I can’t remember the last time stocks went up. Has there even been a two-day rally in 2009? The last 15 months have been absolutely terrible for investors, and it doesn’t seem like market prospects will rise anytime soon.

Fed Chairman, Ben Bernanke, recently stated that the recession could last into 2010. That means it could be another 15 months till we see real strength in the stock market. No need to panic though. What would you say if I told you that I discovered a near fool proof way to make money? Read on.

Back on October 27th, the Dow Jones Industrial Average (^DJI) hit a bottom of 8,175. For the next week, until November 4th, the market had an incredible 1,450 (17.7%) point rally. Unfortunately, that was only a temporary bull market run. Ever since November 4th, the stock market has spiraled even lower, recently hitting an 11 year low. No matter what anyone says, the market doesn’t seem to listen. President Obama’s speech in front of a joint session of Congress couldn’t even revive the ailing stock market.

Speaking of President Obama, he wouldn’t have anything to do with the stock market situation, would he? Just to make sure, let’s examine his big events and how they correspond with stock market returns since election night.

Obama Event:

President Obama is elected the next President of the United States. (Nov. 4).

Market Reaction

Down 486 points (Nov. 5).

Down 444 points (Nov. 6).

Obama Event:

President Obama gives his first press conference since the election (Nov. 7).

Market Reaction

Up 249 points (Nov. 7).

Obama Event:

President Obama announces that weekly fireside chats will be posted to YouTube (Nov. 14).

Market Reaction

Down 338 points (Nov. 14).

Obama Event:

President Obama gives a speech on climate change (Nov. 18).

Market Reaction

Down 427 points (Nov. 19).

Down 445 points (Nov. 20).

Obama Event:

Selects Tim Geithner as Treasury Secretary (Nov. 20).

Market Reaction

Up 494 points (Nov. 21).

Obama Event:

President Obama announces his National Security Team (Nov. 28)

Market Reaction

Down 680 points (Dec. 1).

Obama Event:

President Obama has dinner with conservative leaders including

George Will, Larry Kudlow, and Charles Krauthammer (Jan. 13).

Market Reaction

Down 248 points (Jan 14).

Obama Event:

President gives inauguration speech (Jan. 20).

Market Reaction

Down 332 points (Jan. 20).

Obama Event:

House passes first version of the stimulus bill. President

gives speech calling for, “swift action” (Jan. 28).

Market Reaction

Down 226 points (Jan. 29).

Obama Event:

President Obama signs the stimulus bill, and gives speech in Denver (Feb. 17).

Market Reaction

Down 298 points (Feb. 17).

Obama Event:

President Obama announces his plan to cut the deficit

by allowing the Bush tax cuts to expire (Feb. 22).

Market Reaction

Down 251 points (Feb. 23).

Obama Event:

President Obama gives his annual address to a joint session of Congress (Feb. 24).

Market Reaction

Down 80 points (Feb. 25).

The market does appear to be listening; it just doesn’t like what it hears. Almost every time the President speaks, the stock market takes a nose dive. Except for his first press conference as President Elect, and the announcement of Tim Geithner as Treasury Secretary (both occurred in November), he hasn’t said anything that reassured the markets. The market hasn’t responded positively to a single speech he has given in 2009.

The days noted above total an aggregate drop of 3,512 points. But the Dow is only down 2,355 points since the election. This means that the market has rallied 1,157 points when the President does not give a major speech. I know what I’ll be doing the next time our President plans a speech, stimulus package, or anything for that matter.

- Nick Klein

Disclaimer: Nick is short the President and long Free-market Capitalism

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