Some history is in order for all those who like to reward and blame politicians.
Go back to the first war in Iraq. President Bush (the Older) had a 89% approval rating on February 28, 1991. Then the economy tanked. His fault? No. Real estate crashed in the early 1990s. What happened next? President Clinton won the Fall 1992 election. However, Clinton’s election did not signal roaring economic times and Democrats lost the House and Senate to the Republicans for the first time in 40 years during the Fall of 1994. Did Clinton sink the economy in that short time? No.
Then magic happened. During late 1994 the Internet started to roll and in August 1995 Netscape went public (the trigger we are still feeling today). Stock markets boomed during 1995-1999. The Dot-com bubble was on. However, this bubble was a problem and people knew it. Federal Reserve Chairman Greenspan uttered the phrase ‘irrational exuberance’ in a December 1996 speech, but simply pointing out a bubble was only so useful.
The good times kept rolling. President Clinton had an approval rating of 73% on December 19, 1998 — six years into his Presidency. Did he or the Republican Congress have anything to do with record tax receipts coming into government coffers? No. The Dot-com bubble was spinning off cash to everyone. America was feeling rich.
Party over. The Nasdaq crashed March 2000. The Fed knowing the massive problem on their hands, and deathly afraid that the Dow would deflate, started cutting the Fed Funds rate of over 6% on May 16, 2000 to a low of 1% in June 2003. If the Dot-com bubble had not popped in the Spring of 2000 would Al Gore have been President? Of course, but the Fall of 2000 instead brought another President Bush.
President Bush (the Younger) inherited the Dot-com bubble implosion and less than a year into office, 9/11 hit. Two wars followed. However, all of that Fed rate cutting had started problems. This time real estate and the Dow were zooming up. People rewarded Bush for the economy (even though we were just in the middle of another bubble). His second term started in January 2005.
All is well until summer 2007 when the new bubble starts to deflate. It finally crashes in October 2008 and President Obama wins the Presidency standing at the right place at the right political time. If the economy had not sunk over 2007-8 would McCain be President? Of course. Now the economy is poised to crater again. If it crashes is it all Obama’s fault? No.
So are you really sitting there still thinking Presidents change your financial life? Presidents have all been irrelevant for the last 20 years. Behavioral finance answers our market questions, not the behavior of politicians. There are sheep in my film for a reason.