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All the Intellectuals Who Told Us Stocks Would Crash if Trump Won

Discussion in 'The Americas' started by omya, Nov 9, 2017.

  1. omya

    omya Lt. Colonel ELITE MEMBER

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    There really never has been anything like it in the lifetime of practically anyone who still treads upon the earth.
    In the year since Donald Trump’s upset electoral victory over Hillary Clinton, the stock market has soared to record-breaking heights. No first-term president has overseen a post-election market rally this strong since people were singing, “Happy Days are Here Again” after the election of Franklin Delano Roosevelt in 1932.

    But even more remarkable than the Trump rally itself has been the delicious comeupance of so many market pundits, Wall Street analysts, and economists who had announced before the election that a Trump victory would crash the market, prove instantly ruinous to the economy, and produce any number of terrible financial consequences. We may never know exactly what caused the poobahs to warn that we risked vengence of the Gods of the Market by voting for Trump. Most likely it was some combination of solipisism (they didn’t like Trump, so they figured the market wouldn’t), economic ideology (free traders always think markets will crash without their policies), and class bias (they heard the people singing the songs of angry men and worried that people would not be slaves again).

    Some of us had argued before the election that the predictions of doom were badly off-base. If Trump were elected it would indicate that a substantial number of Americans believed that we really could “make American great again.” Surely that itself would provide a boost to investor sentiment, consumer sentiment, business sentiment, and the true and objective measure of those things, the stock market.

    The Trump crash never even had the courtesy to stay around for a full day. After an initial slide in futures markets in the middle of the night, once it became clear Trump had won, stocks rose relentlessly. All three major stock indexes—the Dow Jones Industrial Average, the S&P 500 and the Nasdaq —rose on Nov. 9. Since then, stocks have been on a massive run. The Dow is up nearly 29 percent, the S&P 500 up by just over 30 percent, and the Nasdaq by 21 percent.

    If the anti-Trump fearmongering were just a harmless fad–the market intellectual’s version of pet rocks or fidget spinners–we could afford to let it slip down the memory hole. But it is important to memorialize the errors of the pre-election pundits, if only to remind ourselves that many of those self-styled wise men got the most important story of our era so badly wrong. After all, some of the worst of the bunch are still out there predictingdoom and gloom from Trump’s policies.

    So here is a rogues gallery of those who said the rally was impossible and boldly predicted the crash that was never to materialize.

    • Mark Cuban. “I can say with 100 percent certainty that there is a really good chance we could see a huge, huge correction,” Cuban told CNN. “That uncertainty potentially as the president of the United States — that’s the last thing Wall Street wants to hear.”
    • Erik Jones. “You would see incredible pressure on stock prices if Trump wins and everyone flooding into rare metals like gold and into bonds” in the U.S., Germany and the United Kingdom, Erik Jones, professor at the Johns Hopkins University School of Advanced International Studies, told Politico’s Ben White.
    • Justin Wolfers and Eric Zitzewitz. “Given the magnitude of the price movements, we estimate that market participants believe that a Trump victory would reduce the value of the S&P 500, the UK, and Asian stock markets by 10-15%,” University of Michigan professor Wolfers and Dartmouth professor Zitzewitz wrote in a report that supposedly scientifically forecast the market’s reaction to Trump’s victory
    • Andrew Ross Sorkin. The New York Times clomnist and CNBC anchor wrote: “In all likelihood, a Trump victory would lead to a swift, knee-jerk sell-off. Many investors will choose to sell stocks and ask questions later.” In fairness to Sorkin he hedged his believe in the sell-off by writing: In truth, it’s impossible to predict how the markets would settle into a Trump presidency, despite the speculation on all sides. In all likelihood, it will take time for investors to truly make sense and “math out” how his policies would affect the economy.
    • Lawrence G. McDonald of ACG Analytics hedged also, predicting a massive sell-off followed by a relief rally. “Trump will create a colossal panic, but the relief rally will be outstanding,” he told Sorkin. Well, he got the rally right, anyway.
    • Simon Johnson, a former chief economist of the IMF, a professor at MIT Sloan, a senior fellow at the Peterson Institute for International Economics, and co-founder of a leading economics blog, The Baseline Scenario had perhaps the most panicked reaction, in keeping with his status as America’s most authoritative economists. “With the United States’ presidential election on November 8, and a series of elections and other political decisions fast approaching in Europe, now is a good time to ask whether the global economy is in good enough shape to withstand another major negative shock. The answer, unfortunately, is that growth and employment around the world look fragile. A big adverse surprise – like the election of Donald Trump in the US – would likely cause the stock market to crash and plunge the world into recession,” Johnson wrote on October 29, 2016.
    • Ian Winer, director of equity sales trading for the securities firm Wedbush, predicted a 50 percent fall in stocks if Trump won.
    • Bridgewater Associates. “On Tuesday, Bridgewater Associates sent out a note to its clients predicting that the Dow Jones Industrial Average could plunge nearly 2,000 points in one day if Trump is elected president. That would be the biggest one-day slump in stock market history, by more than double, besting the 777 point plunge that happened on October 29, 2008, at the high of the panic surrounding the financial crisis. The drop would translate into a 10.4% dive, and immediately send the stock market into correction territory,’ Fortune‘s Stephen Gandel reported.
    • Tobias Levkovich, Citigroup’s chief U.S. equity analyst. “A win for Donald Trump in next week’s election could take a big bite out U.S. stocks, according to the latest forecast from Citi,” CNN Money reported. “In a note to clients late Thursday, the bank said the S&P 500 will fall by 3% to 5% immediately if Trump is elected. A victory by Hillary Clinton wouldn’t move stocks significantly, it predicted.”
    • Macroeconomic Advisers. “If Donald Trump wins the election, U.S. stocks (and likely many other markets overseas) will almost certainly tank,” Heather Long wrote for CNN Money. “How big of a drop? Forecasting firm Macroeconomic Advisors predicts an 8% fall in the U.S. A new paper out Friday from the Brookings Institute projects a 10% to 15% nosedive. You get the idea.”
    While many of market watchers remain allergic to giving Trump any credit for the massive rise in the stock market, there’s no denying that the experts got the direction badly wrong prior to the election.

    http://www.breitbart.com/big-govern...mp-won/?utm_source=facebook&utm_medium=social
     
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  2. BMD

    BMD Colonel ELITE MEMBER

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    Basically some people like to actually try and crash the market simply by predicting it will happen. Same deal with Brexit.
     
  3. Wolfpack

    Wolfpack Captain FULL MEMBER

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    My Younger brother does trade stocks daily, when the media was discrediting Modi, I told him to invest on market, he won. Again, for US elections despite all MSM propaganda of how Hillary was a winner, most of us Indians knew Trump would win, got money again .
    Again, you need to watch out the market for Himachal Pradesh and mainly Gujarat Elections.
    Many, Opposition parties are on last breath. I believe it will be a clean sweep for BJP and the end of Congress.
     
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  4. Wolfpack

    Wolfpack Captain FULL MEMBER

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    They are called 'Bears' my friend and they always bet on crashing the market. While 'Bulls' bet on raising the market to new levels.
     
  5. HariPrasad

    HariPrasad Lieutenant FULL MEMBER

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    One more great intellectual Rahul Gandhi told us that if Modi comes to power, 27000 people will die.
     
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  6. BMD

    BMD Colonel ELITE MEMBER

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    Betting that way is one thing, but actually trying to make the market move by BSing is another thing.
     
  7. bharathp

    bharathp Developers Guild IDF NewBie

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    do you remember the guys who predicted the Indian stock market plunge after Demo and GST? the list is going to have some of the usual suspects. (I remember Owaisi said we ll lose 3% GDP).
     
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  8. PeegooFeng41

    PeegooFeng41 2nd Lieutant FULL MEMBER

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    I have a fun read regarding those who think they 'know' the market, courtesy Taleb.


    Kuwait and Oil : How Fat Tony Got Rich

    Not the same “ting”—

    Fat Tony got to become (literally) Fat Tony, rich and heavier, owing to the Kuwait war. It was in January 1991 on the day the United States attacked Bagdad to restitute Kuwait which Iraq had invaded.

    In June 1990, the then-dictator of Iraq Saddam Hussein, invaded the small oil producing Emirate of Kuwait, and took control. Oil prices rose, as with tension in the Mideast. Later, the United States along with a coalition threatened to snatch back Kuwait from the Iraqi invaders. There was tension and anxiety throughout the remaining year of 1990, with considerable uncertainty about a generalized war and its effect. Oil prices shot up owing to the fear of the disruption of the supplies.

    Everyone was watchful, waiting for the beginning of hostilities. The United States had given an ultimatum to Saddam —so there was great confusion about the possibility of war, as Saddam could have settled, going home, and everything returns to order. The main discussions were about fear of an oil shortage, of having to car pool, to ride bicycles again, as in teh dark days of 1973. Worse, it was conjectured that Saddam would sabotage the oil fields, and destroy those of Saudi Arabia, setting us back for years of repair.

    Every intelligent person in socioeconomics had his theory, probabilities, scenarios and all that. Except Fat Tony. He didn’t even know where Iraq was, whether it was a province in Morocco or East of Pakistan — he didn’t know the food, so the place did not exist for him. All he knew is that suckers exist.

    These were the days before he became lunch-buddy with Nero. Tony had come to a bit of a starter-fortune derived from real estate deals. He wanted to have fun speculating with a small piece of the cash he had —beats Sunday evening poker. So he went to his cousin Dominic who worked on NYMEX a commodity exchange in New York, and was known as the big oil broker. Tony told him that he wanted to get in a position to benefit from the collapse of the price of oil. Dominic got upset with him: “you don’t know nothing about oil, you don’t know nothing about mahkets (markets), what the f*** you doing? You are going to lose your shoyt (shirt)”. Tony was adamant: he wanted to make a big bet that the price would collapse. “Don’t you know there is going to be war?”, Dominic asked. Tony: “yes, war”. And what would happen if there is war? Tony: “oil would collapse”.

    Then Dominic asked him: “what if there is no war, Arabs kiss each others, and Saddam goes home?”.

    Tony: “No war, then the price would also collapse”. So in Tony’s mind the price would collapse either way.

    Dominic: “I repeat, you don’t know nothing about oil and nothing about the Middle East. Remember Tony you got no edjucashion”.

    Tony: “I repeat, I don’t know nothing about oil; but I know something about suckers”.

    Then, with his usual calm: “what the f*** does war have to do with the price of oil?”.

    If you asked any intelligent person in New York at the time, he would have predicted a rise in the price of oil in the event of war. There was great certainty about the causal link. But that was precisely what Tony bet against: They are all prepared for a rise in oil from war, so the price got to have adjusted to it. War could cause a rise of oil, not scheduled war —since prices adjust to expectation. It has to be “in the price” as he said.

    Indeed, on the news of war, oil collapsed from a level around $39 a by almost half, and Tony turned his investment of three hundred thousand into eight million dollars. “There are so few occasions in one’s life, you can’t miss them”, he later told Nero, as he was convincing his thinner friend to bet on a collapse of financial system. “Good speculative bets come to you, don’t just get them by staying focused on the news”.

    And the main Fat Tony statement: “Kuwait and oil are not the same “ting” (thing).”

    Indeed many people lost their shirt from the drop of oil —while correctly predicting war. There had been too much hoarding, too much inventory. I recall at the time going into the office of a large fund manager who had the map of Iraq on the wall. They knew every possible thing about Kuwait, Iraq, Washington, the United Nations. Except for the very simple fact that it has nothing to do with oil. All these analyses were nice, but not too connected to anything. Just as much of school and what they call knowledge is not connected to knowledge ...
     
    Last edited: Nov 16, 2017
  9. BMD

    BMD Colonel ELITE MEMBER

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    Trump took over in January 2017.
    [​IMG]
     

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