Beware of the prognosticators. We are deeply saddened that the 2020 political campaigns are ramping up. We really dislike political campaign season and the scare tactics deployed by pundits. Already the scuttlebutt from some hedge fund guys is that if Elizabeth Warren wins the presidency of the United States, the stock market will plummet –25%. We are making no political comments here, but our reaction is, “Really???”
Remember back to the halcyon days of 2016 when many (from the right and left) were predicting that the market would swoon upon the election of Trump? And let’s not forget when it was widely predicted that Obama winning a second term would kill off any hope of continued economic recovery in the 2012 election.
Pundits have to make flashy statements to justify their job. Hedge fund managers are not prophets. These people are expressing a political opinion, not an investing idea. We are not saying that the president is entirely meaningless, but just beware of people who want you to vote or get scared based upon some dire market prediction that they pull out of thin air. Secular or long-term trends have far more impact on market returns than any president ever could. The best possible president could preside over a down economy if the global secular trends were not in their favor.
Keeping up with the latest financial news, earnings for the S&P 500 are down year-over-year (YOY), but less than forecast. This will most likely mean that when this reporting season is done, earnings will have fallen for three straight quarters. The current forecast for Q4 2019 earnings have gone negative as well.