Author Topic: Impact of US election on stock market?  (Read 9576 times)

MustacheAndaHalf

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Re: Impact of US election on stock market?
« Reply #100 on: October 15, 2020, 07:33:15 AM »
USSR had a huge problem with productivity - things took forever.  I recall a joke that a guy (in the USSR) buys a dishwasher:
Customer: "When will it be delivered?"
Salesman: "In ten years"
Customer: "Morning or afternoon?"
Salesman: "It's in 10 years, why does it matter?"
Customer: "Because I'm having a refrigerator delivered that afternoon."

I don't really see the comparisons to 1980s USSR.  Didn't the USSR pour all of it's resources into preventing one soviet country from going bankrupt?  And instead the whole USSR went bankrupt?

The U.S. is far richer than the 1980s USSR by any measure - global market cap, size of economy, productivity, etc.  And when a car rental business is failing in the U.S., like Hertz, it's allowed to go bankrupt and collapse in an orderly manner.  That too, differs from the USSR approach.

The US just lost Trillions losing a 20 year war in Afghanistan, just like the Soviets.
The US just lost more trillions in Iraq.
The US just this year bailed out its airlines, banks, and other industries. Are they partially state-owned-enterprises now? Do we expect them to increase productivity?
Would a process of decline be impossible beyond a certain scale?
Search for "ussr expense afghanistan" and the estimate is $118 USD in 2019 dollars, which is 20x off the number you claimed.  You can further divide that expense by the USSR's GDP over the years of that war, and see the war was 1% of USSR GDP.  How does that add up to collapse?
https://en.wikipedia.org/wiki/Soviet%E2%80%93Afghan_War

You consider the $25 billion airline relief package (a combination of loans and payments) to be significant enough to cause the decline of the U.S.?

During Covid, no country's airlines are showing increased productivity.  Very few people are flying, and many countries restrict travelers.  Why would airline productivity during Covid-19 be a measure of any country's decline?

ChpBstrd

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Re: Impact of US election on stock market?
« Reply #101 on: October 15, 2020, 02:42:32 PM »
USSR had a huge problem with productivity - things took forever.  I recall a joke that a guy (in the USSR) buys a dishwasher:
Customer: "When will it be delivered?"
Salesman: "In ten years"
Customer: "Morning or afternoon?"
Salesman: "It's in 10 years, why does it matter?"
Customer: "Because I'm having a refrigerator delivered that afternoon."

I don't really see the comparisons to 1980s USSR.  Didn't the USSR pour all of it's resources into preventing one soviet country from going bankrupt?  And instead the whole USSR went bankrupt?

The U.S. is far richer than the 1980s USSR by any measure - global market cap, size of economy, productivity, etc.  And when a car rental business is failing in the U.S., like Hertz, it's allowed to go bankrupt and collapse in an orderly manner.  That too, differs from the USSR approach.

The US just lost Trillions losing a 20 year war in Afghanistan, just like the Soviets.
The US just lost more trillions in Iraq.
The US just this year bailed out its airlines, banks, and other industries. Are they partially state-owned-enterprises now? Do we expect them to increase productivity?
Would a process of decline be impossible beyond a certain scale?
Search for "ussr expense afghanistan" and the estimate is $118 USD in 2019 dollars, which is 20x off the number you claimed.  You can further divide that expense by the USSR's GDP over the years of that war, and see the war was 1% of USSR GDP.  How does that add up to collapse?
https://en.wikipedia.org/wiki/Soviet%E2%80%93Afghan_War

You consider the $25 billion airline relief package (a combination of loans and payments) to be significant enough to cause the decline of the U.S.?

During Covid, no country's airlines are showing increased productivity.  Very few people are flying, and many countries restrict travelers.  Why would airline productivity during Covid-19 be a measure of any country's decline?

My point is that over the last 20y the US has spent itself into a historically high debt situation in terms of debt/GDP and has received little to nothing of value in return (I.e. no infrastructure, no generation of GI Bill high achievers, no R&D that creates whole new industries).

Airlines and banks are only some of the industries where the government owns a significant slice of their capital structure. It is fair to say many of them would be out of business right now had the government allowed capitalism to take its course. This is closer to a semi-planned economy than many would like to admit. Government subsidies for industries are generally anti-competitive and productivity-reducing, as we see with Chinaís SOEs.

The USSRís inability to defeat the impoverished and illiterate Taliban on open terrain was a clear signal of its military decline and is considered by historians to be a precursor to the fall of the USSR. This loss encouraged independence movements from East Germany to Ukraine. Similarly, the USís experience of the exact same loss with much more resources thrown into the country is a signal that the US military is corrupt and unable to defeat any modesty competitive adversary. Consequences of this change include increasing odds that smaller countries will abandon or reduce their alliances with the US, as we saw in the Philippines. Eventually they stop banking in New York and the economic sphere of the dollar shrinks. This is how empires end.

3toesloth

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Re: Impact of US election on stock market?
« Reply #102 on: October 15, 2020, 04:25:22 PM »
I tend to worry that government spending was around 1/3 of GDP before Covid, now who knows what it will become. How can an economy be spending that high of a proportion on government given it has very low ROI. I realize that the taxes get collected and the money spent gets circulated throughout the economy, but what happens as velocity drops off or tax revenue continues to drop. No way any of that is sustainable. Ironically I think a large war could allow a giant reset as long as USA finds a way to delete the debt.

talltexan

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Re: Impact of US election on stock market?
« Reply #103 on: October 16, 2020, 06:42:15 AM »
I actually see this as exactly the reverse: having day-to-day business decisions made by the government is the BAD part of communism. "Losing money" is tolerable when you have a sovereign currency, particularly when those expenses can made less burdensome by restoring long-term economic growth through private sector dynamism.

bigblock440

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Re: Impact of US election on stock market?
« Reply #104 on: October 16, 2020, 10:34:23 AM »
USSR had a huge problem with productivity - things took forever.  I recall a joke that a guy (in the USSR) buys a dishwasher:
Customer: "When will it be delivered?"
Salesman: "In ten years"
Customer: "Morning or afternoon?"
Salesman: "It's in 10 years, why does it matter?"
Customer: "Because I'm having a refrigerator delivered that afternoon."

I don't really see the comparisons to 1980s USSR.  Didn't the USSR pour all of it's resources into preventing one soviet country from going bankrupt?  And instead the whole USSR went bankrupt?

The U.S. is far richer than the 1980s USSR by any measure - global market cap, size of economy, productivity, etc.  And when a car rental business is failing in the U.S., like Hertz, it's allowed to go bankrupt and collapse in an orderly manner.  That too, differs from the USSR approach.

The US just lost Trillions losing a 20 year war in Afghanistan, just like the Soviets.
The US just lost more trillions in Iraq.
The US just this year bailed out its airlines, banks, and other industries. Are they partially state-owned-enterprises now? Do we expect them to increase productivity?
Would a process of decline be impossible beyond a certain scale?
Search for "ussr expense afghanistan" and the estimate is $118 USD in 2019 dollars, which is 20x off the number you claimed.  You can further divide that expense by the USSR's GDP over the years of that war, and see the war was 1% of USSR GDP.  How does that add up to collapse?
https://en.wikipedia.org/wiki/Soviet%E2%80%93Afghan_War

You consider the $25 billion airline relief package (a combination of loans and payments) to be significant enough to cause the decline of the U.S.?

During Covid, no country's airlines are showing increased productivity.  Very few people are flying, and many countries restrict travelers.  Why would airline productivity during Covid-19 be a measure of any country's decline?

My point is that over the last 20y the US has spent itself into a historically high debt situation in terms of debt/GDP and has received little to nothing of value in return (I.e. no infrastructure, no generation of GI Bill high achievers, no R&D that creates whole new industries1).

Airlines and banks are only some of the industries where the government owns a significant slice of their capital structure. It is fair to say many of them would be out of business right now had the government allowed capitalism to take its course. This is closer to a semi-planned economy than many would like to admit.2 Government subsidies for industries are generally anti-competitive and productivity-reducing, as we see with Chinaís SOEs.

The USSRís inability to defeat the impoverished and illiterate Taliban on open terrain3 was a clear signal of its military decline and is considered by historians to be a precursor to the fall of the USSR. This loss encouraged independence movements from East Germany to Ukraine. Similarly, the USís experience of the exact same loss with much more resources thrown into the country is a signal that the US military is corrupt and unable to defeat any modesty competitive adversary3. Consequences of this change include increasing odds that smaller countries will abandon or reduce their alliances with the US, as we saw in the Philippines. Eventually they stop banking in New York and the economic sphere of the dollar shrinks. This is how empires end.

1) Yes, agreed that the excessive debt is bad, as were the subsidies to renewables and electric cars.  It does seem like the electric vehicles could be a new industry.
2) Also agree, this is far from a free market, and does need work to get a bit freeer.
3) I'm not sure you definition of open terrain, but I don't think most would consider Afghanistan it.  While there is very little vegetation, most of the country is a series of mountain ranges, rocky outcroppings, caves, and cliffs.  The lack of any infrastructure or actual army made standard warfare difficult.  Similar factors to Vietnam and even the Revolutionary war.  Never get involved in a land war in Asia.

bwall

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Re: Impact of US election on stock market?
« Reply #105 on: October 16, 2020, 12:26:21 PM »
Afghanistan: Netflix has a show on "The Outpost", which I found so interesting, I bought the book it was based on. US soldiers there used many words to describe the terrain of Afghanistan, 'open' was not one of them.

MustacheAndaHalf

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Re: Impact of US election on stock market?
« Reply #106 on: October 17, 2020, 12:41:17 AM »
https://www.cia.gov/library/publications/the-world-factbook/geos/af.html
"mostly rugged mountains; plains in north and southwest"

Wouldn't using incorrect data lead to incorrect theories?  You seem to be doubling down on the theory, even as your data falls apart.


smoghat

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Re: Impact of US election on stock market?
« Reply #107 on: October 17, 2020, 08:52:49 PM »
Markets are machines for collectively predicting the future. At this point the market has largely baked in a Biden win. I suspect that this is why the markets have done so well even with the economy in shambles. But that make no sense, you may say, surely Trump was good for business. Not really, the tariffs have drawn bloody everywhere, from lobster fishermen in Maine to Silicon Valley. Most businesses, hedge funds aside, thrive on predictable actions by the government. With Biden in office they arenít going to have any big surprises. It will be boring and they will thrive under that.

bacchi

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Re: Impact of US election on stock market?
« Reply #108 on: October 18, 2020, 04:24:35 PM »
IB is expecting high volatility post-election. They're tightening up their margin requirements.

talltexan

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Re: Impact of US election on stock market?
« Reply #109 on: October 19, 2020, 04:28:16 AM »
Is it settled that Biden will reverse the Trump tariffs?

Did the market's progression upwards during 2016-2019 slow when Trump implemented the tariffs?

MustacheAndaHalf

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Re: Impact of US election on stock market?
« Reply #110 on: October 19, 2020, 10:34:16 AM »
talltexan - Tariffs in 2016?  Are you sure about that start date?
Before tariffs, there was a tax cut.  A number of high profile companies used the tax savings in share buybacks.

talltexan

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Re: Impact of US election on stock market?
« Reply #111 on: October 19, 2020, 01:28:08 PM »
I should have been more exact in what I was trying to describe.

Market rose with remarkable consistency during CY 2017, and indeed we ended the year with TCJA. Trade war seemed to be most intense beginning summer 2018 through late 2019.

If you simply showed me the graph of the SP500 during that period, I don't know that it would be obvious from those stock prices when the law was signed, or when Trump started hiking tariffs.

Both ought to have been anticipated, because (1) GOP governments cut taxes, and (2) Trump campaigned pretty consistently on tariffs and lowering immigration.

John Galt incarnate!

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Re: Impact of US election on stock market?
« Reply #112 on: October 21, 2020, 07:29:52 PM »


What are your thoughts? Could we see a big crash following the election? Anyone planning on selling just prior to the election?

I am not a stock-market seer.

A stock-market crash is possible immediately following an election.

My opinion is that for days there will be unprecedented uncertainty about  who won.

Since investors dislike uncertainty I think there is a heightened possibility of significant stock-market volatility.

FWIW G.B., I expect Biden to win.

If he does some investors may sell because they fear higher taxes on their investments in stocks.

OTOH, some investors will have a sense of relief and return to normalcy which could spur them to buy stocks.

Under no circumstances would I sell stocks just prior to an election.
« Last Edit: October 21, 2020, 07:32:01 PM by John Galt incarnate! »

John Galt incarnate!

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Re: Impact of US election on stock market?
« Reply #113 on: October 21, 2020, 07:46:16 PM »
One of the strengths of Bogleheads over MMM is that threads like this get shutdown.  Besides, who the hell knows?!

One of the things I find frustrating about the forums over on Bogleheads is how quickly threads get locked. Often if there's even a wiff of political discussion the thread goes *poof*.  however, money and politics cannot be separated so easily.  Taxes, government programs (e.g. the ACA, unemployment, SS) are all political discussions. I prefer open discussions constrained by straight-foward forum rules, rather than the heavy-handed moderators over there.  That said, I post in both locations.

As a free-speech absolutist I always favor  speech and oppose enforced silence.

GuitarStv

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Re: Impact of US election on stock market?
« Reply #114 on: October 22, 2020, 07:04:19 AM »
One of the strengths of Bogleheads over MMM is that threads like this get shutdown.  Besides, who the hell knows?!

One of the things I find frustrating about the forums over on Bogleheads is how quickly threads get locked. Often if there's even a wiff of political discussion the thread goes *poof*.  however, money and politics cannot be separated so easily.  Taxes, government programs (e.g. the ACA, unemployment, SS) are all political discussions. I prefer open discussions constrained by straight-foward forum rules, rather than the heavy-handed moderators over there.  That said, I post in both locations.

As a free-speech absolutist I always favor  speech and oppose enforced silence.

As a free-speech absolutist, a large group of white men screaming "We're going to lynch you n-words as soon as you leave your house!" outside of the home of a black family is perfectly OK in your view?

sherr

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Re: Impact of US election on stock market?
« Reply #115 on: October 22, 2020, 08:11:46 AM »
One of the strengths of Bogleheads over MMM is that threads like this get shutdown.  Besides, who the hell knows?!

One of the things I find frustrating about the forums over on Bogleheads is how quickly threads get locked. Often if there's even a wiff of political discussion the thread goes *poof*.  however, money and politics cannot be separated so easily.  Taxes, government programs (e.g. the ACA, unemployment, SS) are all political discussions. I prefer open discussions constrained by straight-foward forum rules, rather than the heavy-handed moderators over there.  That said, I post in both locations.

As a free-speech absolutist I always favor  speech and oppose enforced silence.

As a free-speech absolutist, a large group of white men screaming "We're going to lynch you n-words as soon as you leave your house!" outside of the home of a black family is perfectly OK in your view?

This conversation does not seem relevant to this thread.

maisymouser

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Re: Impact of US election on stock market?
« Reply #116 on: October 22, 2020, 09:34:02 AM »
One of the strengths of Bogleheads over MMM is that threads like this get shutdown.  Besides, who the hell knows?!

One of the things I find frustrating about the forums over on Bogleheads is how quickly threads get locked. Often if there's even a wiff of political discussion the thread goes *poof*.  however, money and politics cannot be separated so easily.  Taxes, government programs (e.g. the ACA, unemployment, SS) are all political discussions. I prefer open discussions constrained by straight-foward forum rules, rather than the heavy-handed moderators over there.  That said, I post in both locations.

As a free-speech absolutist I always favor  speech and oppose enforced silence.

As a free-speech absolutist, a large group of white men screaming "We're going to lynch you n-words as soon as you leave your house!" outside of the home of a black family is perfectly OK in your view?

...well that escalated quickly...

No, I doubt that is what they meant. Context is forums, not neighborhoods.

GuitarStv

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Re: Impact of US election on stock market?
« Reply #117 on: October 22, 2020, 10:06:01 AM »
My point was simply that being an absolutist invariably results in support of evil.  The real world rarely allows for an absolute viewpoint on topics . . . so it's a weird thing to be proud of.

I suspect what Galt meant is that he believes in free speech within limits that are acceptable to him based on his concept of safety/decency.

ChpBstrd

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Re: Impact of US election on stock market?
« Reply #118 on: October 23, 2020, 07:33:33 AM »
My point was simply that being an absolutist invariably results in support of evil.  The real world rarely allows for an absolute viewpoint on topics . . . so it's a weird thing to be proud of.

I suspect what Galt meant is that he believes in free speech within limits that are acceptable to him based on his concept of safety/decency.

This reminds me of Intro to Philosophy class where we went through utilitarianism, Kantianism, natural law theory, social contract theory, etc. and learned how each principled system on its own leads to some pretty horrible outcomes.

maisymouser

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Re: Impact of US election on stock market?
« Reply #119 on: December 14, 2020, 11:44:55 AM »
Pulling this thread out from the back of the closet. My assessment, retroactively:

Was it reasonable to be worried? Yes. Was there potential for a coup? Yes. Was I personally concerned? Absolutely.

Did I change the frequency or quantity of my regularly scheduled index fund contributions in response to my fears or news items? No.

This was yet another experience where staying the course and being steadfast in that resolve ended up being the most profitable option. Hooray to JC Collins, his teachings for money simpletons like me have yet again proved valuable.

ice_beard

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Re: Impact of US election on stock market?
« Reply #120 on: December 14, 2020, 01:43:04 PM »
I'd argue that it's not over until this trainwreck is removed from the Oval Office and is relegated to rage tweeting about conspiracy theories from Florida. 
Today is certainly an important day, EC votes are being submitted, and in any other normal election, today wouldn't matter much, but this is a very abnormal election all because of one abnormal person. 

ChpBstrd

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Re: Impact of US election on stock market?
« Reply #121 on: December 14, 2020, 02:15:43 PM »
Itís clear to me that

a) We dodged a bullet - a second Trump term would have represented the end of multi-party democracy in the US - but we just barely dodged the bullet, so it is likely a Mike Pence or Tom Cotton will win in Ď24 and this whole process will repeat,

b) Had the election been a smaller loss for Trump, there would have been absolute chaos. The Supreme Court would have likely intervened in Trumpís favor.

c) The stock market is priced for the world 9-12 months from now, when consumers are expected to unleash their wallets upon all the things the pandemic deprived them.

d) The US pandemic death toll may ďonlyĒ hit 750k by the end of 2021, which is a downward revision for me.

e) The US will soon experience an insurgency stemming from the many right wing groups and cults growing on the internet.

f) Chinaís date of economic supremacy over the US has been accelerated a couple of years.

GuitarStv

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Re: Impact of US election on stock market?
« Reply #122 on: December 14, 2020, 02:28:38 PM »
Most of the covid deaths in the US are elderly people.  From a purely analytical point of view I wonder if that will be a net long term positive on economic growth.  Elderly people don't add much to the economy.

Travis

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Re: Impact of US election on stock market?
« Reply #123 on: December 14, 2020, 06:56:58 PM »
I'd argue that it's not over until this trainwreck is removed from the Oval Office and is relegated to rage tweeting about conspiracy theories from Florida. 
Today is certainly an important day, EC votes are being submitted, and in any other normal election, today wouldn't matter much, but this is a very abnormal election all because of one abnormal person.

I wonder when the last time "the Electoral College has voted" even made it into a newspaper, let alone the front page.

talltexan

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Re: Impact of US election on stock market?
« Reply #124 on: December 15, 2020, 06:24:04 AM »
Most of the covid deaths in the US are elderly people.  From a purely analytical point of view I wonder if that will be a net long term positive on economic growth.  Elderly people don't add much to the economy.

If you're performing a VSL-type analysis, then we are losing fewer years when elderly people die (and--perhaps--zero working years). I'll accept that.

But we're also spending a ton of productive health care resources in mitigating this virus and providing care to people old and young. Young people with severe cases are suffering, losing weeks or months here and there and some of them are dying as well. This removes their labor.

Meanwhile, HH are dipping into savings to get through this period, particularly if they've lost employment. That dissaving will decrease investment which will reverberate in future periods where those investments would have yielded a return. At extreme ends of the scale, lost rent and evictions will produce dislocation costs and compromise the rate of return of valuable assets. The economy will likely be at a lower output rate permanently than if we could have followed a South-Korea type trajectory through this crisis. 

PDXTabs

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Re: Impact of US election on stock market?
« Reply #125 on: December 15, 2020, 09:06:02 AM »
Meanwhile, HH are dipping into savings to get through this period, particularly if they've lost employment. That dissaving will decrease investment which will reverberate in future periods where those investments would have yielded a return. At extreme ends of the scale, lost rent and evictions will produce dislocation costs and compromise the rate of return of valuable assets. The economy will likely be at a lower output rate permanently than if we could have followed a South-Korea type trajectory through this crisis.

Along those lines: every dollar of capital raised for economic stimulus through government debt is a dollar that wasn't put into private productive use somehow.

talltexan

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Re: Impact of US election on stock market?
« Reply #126 on: December 16, 2020, 08:20:25 AM »
I will challenge this: check out the St. Louis FRB series on private investment (setting aside housing) at https://fred.stlouisfed.org/series/PNFI

Investment was already dropping in late 2019 when people had little preview of the massive government actions that would come in the spring. The private sector was having trouble finding productive investments for some other reason than the massive public deficits that we were running from March 2020 through the present.