Saturday, January 01, 2005

The New York Times and the post-election stock market rally

Bloggers are talking about an article in today's New York Times about the post-election stock market rally. TigerHawk thinks the article represents anti-Bush bias in the New York Times.

The Big Trunk at Power Line seems to agree that TigerHawk found anti-Bush bias.

The New York Times is surely biased against Bush, but I am not sure I see any bias here. I think the real explanation is like TigerHawk (who says he's tall, went to an Ivy League School, and has muscles) said:

If one were charitably inclined toward the Times on this fine New Year's Day, one might give it a pass. I suppose that their starting lineup isn't on duty on New Year's Eve.

Well I am feeling charitably inclined today. Except for mistakes where the New York Times' chart says Harry Truman won the election in 1944 and Teddy Roosevelt won in 1900. There's no excuse for getting historical facts wrong.

TigerHawk says that if the rally were measured from October 26th instead of November 1st, the Bush rally would be a lot bigger. I suppose it's true, but today's article is about post-Election stock market performance, and October 26th was before election day! You could always find a set of arbitrary dates to make a short-term span seem better or worse than it actually was.

I don't know why post-election stock market performance matters anyway. According to most finance experts, short term stock market fluctuations are a random walk. The biggest post-election to New Year's stock market rally happened after Herbert Hoover was elected. But during his presidency, our nation suffered its worst economic collapse in history. Ronald Reagan's post-election stock market performances were pretty mediocre, but his policies led to great economic expansion.

President Bush doesn't deserve any economic credit anyway. What has he done for our economy? Has he reduced wasteful government spending? Has he eliminated burdensome regulations? Has he simplified the tax code? I think not. People who rightly hate Democrats are too quick to praise Bush because he's not a Democrat, but in reality he's a pretty lousy President.


TigerHawk said...

OK. That was embarrassing! I get what I deserved!

pillow soft/rock hard said...

Right On!!

Randy said...

I know federal employees that are having to do double the work because the Federal Government is cutting back a lot. It started with Clinton and Bush is doing the same. So there is some cutting back being done.

Mr. X said...

People who rightly hate Democrats are too quick to praise Bush because he's not a Democrat, but in reality he's a pretty lousy President.Pretty lousy? Methinks you are too kind. Massive spending and unjust wars get him well into "very bad" territory. The latest proposal to create prisons for the indefinite detention of prisoners held without charge moves him up to terrible.

Good luck with the blog. I added you to my blogroll.

Yours truly,
Mr. X

...fight the good fight...

jakethehellcat said...

Limiting the time frame of the election market reaction to the election reveals either a political bias or an ignorance of market activity, if not both. Many market moves happen in anticipation of an event ... (hence the trader's maxim, "buy on the rumor, sell on the news"). It could be argued that the market run up BEFORE the actual election was a reaction to increasingly positive (from the Bush campaign perspective) news (poll results, etc.) It would not have been an irrational "bet" in the days running up to the election to buy in anticipation of a Bush victory (we very well might have seen the opposite if a Kerry victory were anticipated). After the election was confirmed, the smart traders sold off, leaving the johnnie-kerry-lately's to buy into a falling market.

It's pretty obvious that this is what happened. So the question is, was the Times writer ignorant of this phenomenon (or at least the possibility of it), or did he purposely exclude it from his story?

But in either event, a truthful reportage would have included not only the post-election downward drift, but also the pre-election run-up, and the fact that the market closed higher at the end of 2004 than it has been for the previous two years.

But of three bits of information that might have been useful to a reader in interpreting the stock market action, the writer included the one that supported his thesis.

Is this bias? You judge.