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crazyguy's avatar

Is there a correlation between stock prices and Biden's chances?

Asked by crazyguy (416points) 1 week ago

To some extent the stock market is a reflection of the economy going forward. Publicly traded corporations can only flourish when they enjoy current high profits and have reasonable chances of future profits. Since Trump’s strong suit, judging by the polls, is the economy, I think Biden’s chances will diminish if the economy comes roaring back. What do you think?

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53 Answers

Tropical_Willie's avatar

@crazyguy the economy is on tender-hooks, bail-out money to the masses is at an end.

After Labor day surge of COVID-19 (because of college returning face to face classes and all the GOP supporters long weekend parties) we had five parties within ten houses in all directions up to fifty people at each.
Social distancing is not in Trump’s vocabulary, which is needed. Also masks need to be a requirement to reduce the spread. Being a spin doctor after 400,000 people die is not a sign of a “Stable Genius”.

Darth_Algar's avatar

The stock market might be a good indicator of how much fatter the 1% are getting, but it’s a piss poor indicator of how well working class families are doing.

crazyguy's avatar

Tropical: If you reread my question, it is not about whether the economy is better or not; it is about Biden’s chances in relation to the stock market. In other words, if the stock market stays at current record levels, for whatever reason are his chances helped or hurt?

crazyguy's avatar

Darth: You missed the thrust of my question. The question is rather simple: is there a correlation? Or not?

zenvelo's avatar

Actually, the market is reacting favorably to Biden’s chances, because investors are tired of 3½ years of insane tweets and vindictive trade wars.

crazyguy's avatar

zenvelo: That is your interpretation. Mine is that the stock market has dismissed Biden’s chances or realized that he will never be able to pass his draconian tax increases.

kritiper's avatar

None that can be pinpointed.

Darth_Algar's avatar

@crazyguy

I did not miss the thrust of your question. My answer is in my response.

Unless you need things to be spoonfed in simple “yes” and “no” bites. If that’s the case the answer is “no”.

KNOWITALL's avatar

The political talking heads said that a good economy hurts Biden’s chances, as Trump can use it to campaign on. Many of his voters remember the numbers during Obama and have watched closely through Trumps term.

stanleybmanly's avatar

There might have been a correlation prior to the arrival of the pandemic. By November, both the disease and the wrecked economy in its wake will make the stock market as relevant as a window fan to relief from the heat of a nuclear detonation.

Jaxk's avatar

Yes there is a correlation but it’s not as simple as looking forward and guessing whether the economy will rise or fall. Biden is an unknown to the market. Uncertainty depresses the market. Things like prolonging the election past Nov 3 will have a negative effect as well. Trump is a known quantity, Biden is not. So the more it looks like a Biden win, the more uncertainty and consequently the more likely we are to have a Bear market.

Darth_Algar's avatar

Not sure how a guy who’s been in Washington for four and a half decades, including 8 years in the White House already, is an “unknown quantity”.

stanleybmanly's avatar

@Jaxk So it’s the prospect of Biden that will wreck the market? The disease and collapse of the economy are irrelevant?

Jaxk's avatar

@Darth_Algar – He’s changed the position he held over the past 4+ decades at the whim of the polls. Where he stands on any given issue is anybody’s guess and where he stands today may change tomorrow.

@stanleybmanly – The influx of killer bees may have an impact as well but that wasn’t the question.

hmmmmmm's avatar

@Jaxk: “He’s changed the position he held over the past 4+ decades at the whim of the polls. Where he stands on any given issue is anybody’s guess and where he stands today may change tomorrow.”

As @Darth_Algar mentions, you know this guy. You also know that he’s the establishment candidate whose body was rolled in to stop the party from shifting to the left even slightly. So, you have a very known candidate running exactly how these candidates run (give some minor lip service to “change”), yet you feel he’s an “unknown”? This is the guy who promised the rich that “nothing will fundamentally change” if he were elected.

Come on.

crazyguy's avatar

@kritiper Excuse me but your answer sounds like a cop-out.

@Darth_Algar You did not answer my question the first time, or, for that matter the second time.

@KNOWITALL Thanks for your answer. The only time a challenger has a chance against the incumbent is if the population has an empty wallet.

crazyguy's avatar

Continuing my responses:

@stanleybmanly Thanks to @jaxk for setting Stan straight! The question is a hypothetical of the “what if” variety. So I am not asking your opinion of what may transpire; I am asking: “What if the stock market keeps booming?”

@Jaxk I agree with you that the market prefers a known quantity. No matter how long Biden has been in DC, his possible actions as President are unknown. For instance, if the market believed Biden has a realistic chance of winning AND implementing his corporate tax increase, the market would be a lot lower than it is. In a way the market is a self-fulfilling prophecy – by staying high it depresses Biden’s chances of a win.

@stanleybmanly In response to your response to @Jaxk, let me just say if the market truly believed that the economy is collapsing, it would be down by now.

@hmmmmmm You are right about Biden. He was dragged kicking and screaming into the fray to give the DNC some control over the proceedings. He will be dumped in favor of Harris as soon as he tries to exert himself. For instance if he tries to keep his promise to the rich, he will be dumped the very next day.

hmmmmmm's avatar

@crazyguy: “For instance if he tries to keep his promise to the rich, he will be dumped the very next day.”

This is tiring. I’ve got to bail on this conversation. Why would the DNC dump Biden for doing what they want him to do? You guys seriously make the DNC and Dem party sound way better than it is. You guys have nothing to worry about. Nobody’s coming for your money.

AlaskaTundrea's avatar

I don’t think what the Stock Market does or doesn’t do really has an impact on most average Americans. I do have some stocks but most average or lower income people I know do not. Hence they turn a deaf ear to Market doings. Boom or bust, it doesn’t have any immediate impact on many, even if it does in the long run, hence it’s not really all that important to the average American.

stanleybmanly's avatar

You can crow all you want about the stock market, but the common man views the stock market as what it is: a casino for thieving bankers and corporations- the playground of the ruling class. You can bust your ass and never find a bigger disconnect than the stock market and people who do honest work for a living. Most Americans have been defrauded of their pensions already, with the sole exceptions being those employees in the public sector to which the Republicans are openly and notoriously hostile. With Burger King and Uber jobs leading the Trump employment service economy, just how many 401 K accounts are reserved for the service sector defining our workforce? There are still the the civil service pensions of union workers and you can guess how many of them will vote for Trump even if the market’s above the moon.
Who do you suppose will get the votes of postal workers or the teachers’ unions?

zenvelo's avatar

”....The only time a challenger has a chance against the incumbent is if the population has an empty wallet.”

There are 13.6 million unemployed right now. That’s a lot of empty wallets.

KNOWITALL's avatar

@stanleybmanly Actually many of us ignorant hillbillies here in the redlands have 401k’s and IRA’s, ya know, like Obama told us to do.

stanleybmanly's avatar

Tell me the truth. Will your vote depend on where the stockmarket sits come 3 November?

AlaskaTundrea's avatar

I hate to break it to you, crazyguy, but not everyone even has a 401K. 88.7% doesn’t equal everyone, you know. Do the math. That missing percentage is a huge number.

KNOWITALL's avatar

@stanley Fair point well made, sir.

crazyguy's avatar

@stanleybmanly I guess your view of the “common man” is very different from mine. I see the common man as a hard working individual who woks hard, plays hard and hopefully saves something for a rainy day. S/he has a 401(k) into which the family invests as much as they can spare. If there is an employer match, the decision is a no-brainer – where else can you get an immediate return of 33–50%? If there is no employer match, you still get the benefit of income tax deferral. So if you are going to save any money at all, there is no better way.

88.7% of all employees do have 401(k)s, I would hope some of them have discovered the joy and the benefits of investing some of those funds in the stock market.

crazyguy's avatar

@zenvelo 11.3% is a significant number; but it is dwarfed by the number of non-empty wallets!

crazyguy's avatar

@KNOWITALL Well said!

@AlaskaTundrea Yes, 11.3% of 150 million or so is a huge number. Of course 88.7% of 150 million is a much larger number!

Darth_Algar's avatar

@crazyguy

I did answer your question. Others have as well. The average worker does not give a shit what the stock market is doing. If Bezos’ net worth increases by a couple billion in a day the workers in the Amazon warehouse don’t see an increase in their paycheck. The average working class American doesn’t care. And, like it or not, the working class votes.

stanleybmanly's avatar

Ok So the question is one of those what ifs. No one knows, and there’s little point to speculating over it. To my mind the expectation that the market might boost Trump’s chances and torpedo Biden is grasping at straws in the midst of this pandemic. It’s like standing on the deck of the Titanic and watching the iceberg approach then wondering how many passengers will stick around with the announcement that steak will be served for dinner. A much more reliable indicator will be the employment numbers, and of course all those tombstones, closed down and bankrupt businesses, ruined individuals, defaults on mortgages, evictions and unpaid credit card bills.

KNOWITALL's avatar

@stanley Agreed. Defaults will definately be key.

stanleybmanly's avatar

There is clearly a disconnect in recent history with the stock market as economic indicator for those on the ground. In fact that disconnection is now so pronounced that you can no longer use the market as a gauge for the true health of the economy. What the market is in fact is the barometer for those at the the top. It is now the premium indicator as to how well the rich are doing at robbing the rest of us. The fact that the retirement income of millions is tied to the health of the casino is by no means a necessarily positive thing. The obliteration of this country’s industrial sector along with the creative manipulation by the banking and financial sectors in the creation of such schemes as derivatives have transformed the meaning of “value” which formerly tied the stock market to the actual health of the economy. Thus we find the spectacle of stagnant or actually declining wages, spreading urban blight, withering rural America, and an ever expanding homeless population side by side with a booming stock market at record highs. This was an unheard of situation for the majority of my life, and should scare the shit out of anyone looking at it. For once you stop to think about how this can be, you are compelled to draw some very nasty conclusions on where we are headed.

crazyguy's avatar

@Darth_Algar I agree with your statement that the average worker (chances are s/he has at least $10K in his/her 401(k)) does not give a shit what the stock market is doing. That is tragic but true.

It is tragic because if s/he did pay attention, that 401(k) balance may grow and become significant. But then they wouldn’t qualify for any freebies; wouldn’t that be a disaster?

crazyguy's avatar

@stanleybmanly Stock market wealth, just like other holdings, is indeed primarily held by the rich. According to Wikipedia (see https://www.fluther.com/222967/is-there-a-correlation-between-stock-prices-and-bidens-chances/#quip3671854), the top 1% ownwd 43% of the nation’s wealth in 2007. Things have got worse after 2007, in spite of Obama’s best efforts.

Part of the problem is inherited wealth, the other part is risk-taking. The wealthier one is, the more risk one can take and therefore, the more benefit one gets. Another part, not usually mentioned, is the attitude that the stock market “is now the premium indicator as to how well the rich are doing at robbing the rest of us.” That belief hurts the not-so-wealthy more than they will ever realize!

crazyguy's avatar

@stanleybmanly This is in response to your earlier post.

You have the gift of being able to communicate your thoughts by using similes and metaphors. However, I disagree with you. I think the current disconnect between Wall Street and Main Street will not last too long – Main Street will catch up. And when it does, probably by late October, Biden’s chances will disappear.

stanleybmanly's avatar

Wait a second. If you admit that the rich own the market, why is it unfortunate to view it as an indicator as to how well they are doing? It is the ONLY way to view it that makes ANY sense. To regard the current situation as a temporary anomaly is not a sound reaction. You want a metaphor? It’s like standing at the foot of a waterfall and watching the water jump from the pool to the river above then flow upstream.

crazyguy's avatar

@stanleybmanly The rich control it because the less wealthy don’t care about it! I would recommend to non-investors to open a robinhood account, fund it with a few hundred dollars and START investing. If nothing else, you will learn the tricks of the trade.

stanleybmanly's avatar

Since you are so well versed in the history of our country, I would ask you to take a close look at what happens when the less wealthy DO care about it a great deal. Check out 1929 when EVERYBODY gambled.

zenvelo's avatar

The stock market is a leading indicator; demand for stocks is based not on current performance but on future performance. The generally accepted time frame for investors is the market is pricing on expected events six to nine months out.

Given that, and that current polling has Biden ahead of Trump with less than fifty days to the election, the market is calculating a Biden win and a return to stability and growth instead of continued unpredictable trade wars and governing by tweet.

crazyguy's avatar

@zenvelo You are right in saying that the stock market is a leading indicator. However, it is a huge stretch to say that “the market is calculating a Biden win”. If it were, and if it believed Biden’s promise to raise corporate income taxes by 50%, it would be waaay down.

crazyguy's avatar

@stanleybmanly I did not claim to be well versed in the history of our country. However, I did look up the 1929 crash, which was partially caused by excessive optimism.

However, I am not for a minute saying the market can ONLY go up. What I am saying is that one way to build some cash reserves is by investing (not playing) in the stock market.

zenvelo's avatar

”... it believed Biden’s promise to raise corporate income taxes by 50%, it would be waaay down.”. But you think that the professional investor mirrors your belief in what is good for business and the economy.

There are a lot of people in finance that realize that the Administration has been spending money in an inordinate fashion, and that some kind of grown up response to rein in the deficit will be necessary. And those people realize that a prudent increase in some taxes as outlined by Biden make sense and is healthier for the economy.

stanleybmanly's avatar

@crazyguy that is one of the things that does worry me considerably. The Federal Reserve has forced interest rates to the point that alternatives to the casino as a place to park money for the little guy are sparse indeed. Which is another reason the market is up there as a false reflection on how well we are doing.

crazyguy's avatar

@zenvelo I do not think the market gives two hoots about which Party controls the government. However, it is passionate about watching what the government does. And if enough investors believed what the government is doing is not sustainable then the rally would be short-lived.

I well recall 2007. In years before that, my wife, who used to be a mortgage banker, kept saying that mortgage policies were setting the country up for a disaster, which did come in late 2007. So, yes, the froth can last for a long time. However, we hope that the investing public has learnt from the 2007–2009 recession and will cut their euphoria short if they see clouds on the horizon. So far the only cloud I see is that Harris may some day ascend to the throne.

crazyguy's avatar

@stanleybmanly The so-called little guy who is too lazy and illiterate to look for options to the savings account and CDs is to blame. As soon as s/he realizes the value of Wall Street, I’ll be scampering for the exits.

KNOWITALL's avatar

This is why it interests me:

His research also shows how stock market performance leading up to an election has also been a major indicator of the outcome. The performance of the S&P 500 in the three months before votes are cast has predicted 87% of elections since 1928 and 100% since 1984. When returns were positive, the incumbent party wins. If the index suffered losses in the three-month window, the incumbent loses.
....
It should be of no surprise that the markets performed better during a year when an incumbent president is elected compared to a new administration. As explained earlier, the markets hate uncertainty. A new president can create more unknowns: the potential for increased regulations, higher taxes, and other shifts the market perceives as anti-business can all influence sentiment.
....
Since 1933, the highest returning partisan control combination for the S&P 500 has been a Democratic Senate, Republican House, and Democratic President where returns averaged 13.6% per year. In 2020, this would require a reversal for all three.
Our current mix of Republican Senate, Democratic House, and Republican President averages a 10.8% return. This combination is likely if President Trump wins reelection.
Under a Biden victory, the likely scenario is a Republican Senate, Democratic House and (of course) a Democratic President. Interestingly, this combination has not occurred since Grover Cleveland in the election of 1886!

https://www.forbes.com/sites/kristinmckenna/2020/08/18/heres-how-the-stock-market-has-performed-before-during-and-after-presidential-elections/#3ded5fe14f86

crazyguy's avatar

@KNOWITALL Thanks for your input. I did not know all that.

KNOWITALL's avatar

@crazyguy That’s why history is important and fascinating, we can see specific patterns, even in times like this, and with this president.
Frankly from being the incumbent, to stock market performance, even to the protests/riots, all precedents show a conservative win in 2020. Like it or not.

crazyguy's avatar

@KNOWITALL I hope you are right. If the Democrats win all bets are off for our economy.

Tropical_Willie's avatar

I’m betting Putin will be pissed if all his money he is spending to get “Old Orange make-up” reelected and Biden gets elected.

Pandora's avatar

I think most people don’t pay attention to that at all. Yes many have 401k, but if Trump has proven anything about the stock market, it’s that it dances to it own music. Whether Trump does bad or good the market climbs up and will always readjust itself and so we take a big dip. It only really matters to the rich who can snatch their money out in time before a dip and reinvest somewhere else where they won’t lose money. Your regular 401 k person has to ride the wave most of the time.
Now whether that will determine how people in general vote, I don’t know. I think most people will vote on things that actually affect their current life situation and those that matter to them above everything else. Parents with small children worry about health care and child care or the environment. Single people may worry more about employment concerns or college or the environment. There will always be those who are concerned over future retirement and those who live for today. I know when I was in my 20’s and 30’s I didn’t worry so much about retirement but then we only survived on paycheck to paycheck and had nothing extra to put away. At the time, my main concern was two weeks from now and my children’s education and employment. There is a huge part of Americans within that group and they see 401 k’s as the concern of the well to do.

crazyguy's avatar

@Pandora I remember my working years. I guess I was a little ahead of the curve, because I remember changing jobs at age 42 in order to get, not a bigger paycheck, but for a better retirement plan. Even though I was a professional working with other professionals, I remember being surprised at how little my colleagues worried about retirement. That much-ignored 401(k), for most employees, ends up being the biggest nest egg they have. The balance between gratification now and security later is hard to achieve, but CRUCIAL.

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