Is an Obama win already priced into the stock market?

There’s a lively discussion on CNBC this morning. One convincing argument is that an Obama win is priced into the market; a McCain win will cause the market to run to the upside.

Here’s the DJIA for the last year. The arrow in May is about when Obama took the Democratic nomination lead. The arrow in September shows the end of both conventions. There’s a precipitous drop as Obama’s lead starts to widen.

Yes, of course, you can argue anything you like. You guys like to argue! But this fits. Would there have been a “credit crisis” if the markets hadn’t started reacting towards an Obama win? Remember, the “crisis” began as investors started to bet against America.

I tend to believe the market will increase no matter who wins once an outcome is certain. The market hates uncertainty, and things are pretty uncertain out there right now.

Comments

  1. Post hoc, ergo propter hoc. It’s a logical fallacy for a reason.

  2. You took the bait!

    So is your side’s argument that a dulling economy is Bush’s fault.

  3. And I think that is what they call a false dichotomy.

    What else you got in there? Ad hominem? Begging the question? An invalid syllogism or two?

  4. Folkbum, it’s late, so I hope I get this right. A false dichotomy would ask you to chose one of the two statements as correct by rejecting the other. (Either A) the Dow is down because Obama rose in the polls, or B) the economy is bad because George Bush is president. By rejecting one, the other is forced to come forward.)

    Here I think I presented the argument more as if/then. If A then B; If ~A then ~B.

    Yes, my initial argument fails as you described. But yes, the Democratic argument that the economy is bad (as measured by the DJIA over 4 or 8 years) because of George Bush also fails.

    Post hoc ergo propter hoc. There is no causal relation in either argument.

    I do hope you’ll notice that I formed my first approach as a question. I gave my analysis in the end.

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