Election Day in the United States is finally here. Come this Tuesday night, November 4, most of us will go to bed knowing who the next president will be. We will have done our civic duty by voting, and we will sleep soundly knowing that we won't have to listen to any more political prognostications, stump speeches or television ads for at least two years.
But where there's a stock market and social mood, there's a socionomics lesson to be had, and elections provide perfect fodder for prognostications. Bob Prechter has been reading social mood for decades and explaining how bull markets and bear markets – which both reflect the tenor of social mood – can affect a President's time in office. As Prechter says, "The single best predictor of presidential popularity is the trend of the Dow Jones Industrial Average. The precision with which presidential popularity has tracked the Dow and its rate of change is remarkable. It usually also indicates whether an incumbent will win re-election."
Below, you can find out more about how the bull market of the 1980s and '90s affected Presidents Reagan and Clinton – and how the current bear market has hamstrung President Bush's legacy. And for good measure, read a snippet from the last part of Bob's
October 21 Elliott Wave Theorist, in which he explains why in this election, you might want to vote for the candidate "you like the least."
Vote for Independent Investing! Get the kind of information about financial markets that will help you to prosper during the bear market even if the next president won't. The October Elliott Wave Theorist shows a chart that explains why now is not the time to get back into the stock market.
Read more here.
Excerpt from the 2004 edition of Prechter's Perspective
Q: You say that social mood as reflected by the financial markets dictates whether or not political leaders are popular. Have you used this insight of the market to anticipate outcomes for national leaders?
Bob Prechter: Sure, because the popularity of a country's leader is motivated by the same unconscious impulses that drive the stock market and the economy. A president's actual performance is irrelevant. Granted, this is a hard message for most people to accept. But the Elliott Wave Theorist has used this relationship to forecast the fates of three U.S. presidents when the conventional wisdom was predicting the opposite.
· In January 1987, when Ronald Reagan's presidency was being rocked by the Iran-Contra affair, the Theorist said that Reagan would exit as one of our "most loved presidents."
· In April 1991, when George Bush enjoyed a 91% approval rating, the highest for any president, the Theorist predicted that he would lose the next election. That latter forecast was as long a shot as there is in politics.
· Then, as Bill Clinton's term began, we predicted that he would be pushed from office. It didn't happen, but he was impeached.
Q: How did Clinton survive all those scandals?
Bob Prechter: Actually, anyone who doubts my socionomic thesis need only consider the amazing case of Bill Clinton. As Congress got ready to vote on his ouster, the bull market resumed. The higher the market went, the more feelings against him waned. His popularity remained high, and it saved him. It was the same reason that no one cared when Reagan faced the Iran-Contra scandal. …
Q: What about the next guy?
Bob Prechter: [Editor's note: Remember, this interview took place before the current President Bush was elected.] The next president, and maybe even one or two after that, should watch out. They will have to ride out the slide into a deflationary crash and depression. The party of the person who is in office during the worst of it will be devastated politically.
Socionomics and Today’s Political Winds
Socionomics reveals that presidents do not affect social mood but rather that social mood determines how presidents are judged. Bush is the first President of the United States to be in office during a Grand Supercycle bear market, and it has been in force since just before he took his first oath of office. Even though his administration has been in charge almost entirely during waves a and b, the latter of which was a five-year recovery, he has still managed to become the least popular president on record, directly reflecting the degree of the bear market and exactly as The Elliott Wave Theorist predicted. This is not to say that Bush—who pursued so many horrid policies—is innocent of having earned the rating; it is simply to say that any president would have received low ratings, no matter what his policies were.
. . .
Bush is more akin to a larger-degree version of Johnson and Nixon, both of whom left office with low ratings, rather than Van Buren or Hoover, who presided over collapses into depression. The next president will ride the bulk of wave c to the downside and, if he survives his term, will exit more despised than Bush. Objectively, you should vote for the person you like the least.
Vote for Independent Investing! Get the kind of information about financial markets that will help you to prosper during the bear market even if the next president won't. The October Elliott Wave Theorist shows a chart that explains why now is not the time to get back into the stock market.
Read more here.