Following the DJIA since meeting Obama

As we’ve discussed before, President Obama clenched the nomination in mid-May of 2008. Here’s the latest chart:

DJIA since meeting Obama

About half of the loss has been recovered. The Dow when from about 13,000 to about 7,000 and is now around 10,000. I still argue the market new this next president would be a Democrat, and when it turned out to be Obama, it freaked.

I also have a personal theory we’ll be trading a little above and below 10,000 for a long, long time.

Comments

  1. J. Strupp says:

    The stock market does not collapse by almost 50% because of the possibilty of a democratic President.

    There is, however, a tendency for markets to collapse when, oh, global credit markets grind to a stand still following the collapse of a couple of the largest investment banking institutions in the world, one of which, almost single-handedly brought down the global carry trade in one week (Lehman) following it’s demise.

    This tends to freak people out more than politicans from Illinois in my opinion.

  2. Is that what I said? I believe I said we knew there’d be a Democratic president, but Obama was a surprise. Could it be, no really, could it be, that it all unraveled because of Obama? There had to be a trigger somewhere.

  3. The downward slide between September 2007-2008 was the market reacting to the growing pool of now illiquid assets held by most major banking institutions and the possibility that the subprime crisis might be a bigger problem than first thought.

    The crash of September 2008 was the fall of Lehman and realization that these toxic assets could very well lead to the collapse of more major banks (and sovereign defaults) throughout the world.

    This is a textbook example of financial crisis and it’s aftermath. I think it’s safe to say that the possiblility of an Obama Presidency was WAY down the list of concerns on Wall Street last fall.

    Did the threat of Obama Presidency cause the unraveling? No chance. None. The unraveling was well underway at that point.

    The trigger, if I had to try and pinpoint it, was the subtle rise in mortgage rates a couple of years back. This got subprime defaults rolling and the rest is history.

  4. BkfldVoter says:

    The timing of the upward surge coincides with the deadline of IRS declaring penalties for off-shore acounts. Perhaps some of that money has come home?

  5. Hmm. Can’t say I’d thought of that.