Before I begin I will remind my readers that before I retired I was a Registered Commodities Representative which meant I had to go through an F.B.I. screening process and pass a test from the Securities and Exchange Commission that some believe is more difficult than passing a lawyers bar exam. In fact many people fail the test several times before passing it. Prior to becoming an RCR I was both a broker and trader in the currencies markets and dabbled around a bit in the precious metals markets. I’m not trying to be braggadocios here just relaying my level of expertise in the investment market.
Prior to the events that occurred on September the 11th 2001 there was a predictable pattern involving the stock market and presidential elections. Roughly 6 months or so prior to any presidential election the big money men would analyze the political winds and in general begin to pull out of certain stock position doing so very quietly as to not alarm the plebeians.The reason they would do this is uncertainty.
There are only 2 outcomes of any presidential race either the incumbent wins or the challenger. With money-men withdrawing from the market 6 months prior to the election the market always appears to get much weaker especially during the month of August when the plebeians are most likely to be on vacation. As many of you might be aware from a very colorful and patriotic Cadillac commercial, people in Europe tend to take the entire month of August off and go on vacation.
If the incumbent wins the election, the market quickly recovers in most cases. If the incumbent does not win the people will the big money will keep their risk capital on the sidelines for roughly 6 months while they try to figure out what policies the new president will be following (they rarely believe the shit any candidate says during the election). Again we would be looking at a time span somewhere between June and August when the plebeians have other things on their minds and these rich guys can buy back in at bargain prices. This also occurs immediately after the incumbent wins as the plebeians are either still wrapped up in the election cycle or spending whatever they have on hand for Christmas presents. Bargains to be had galore.
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What if there is no incumbent? If there is no incumbent then the markets will be very soft for the better part of a year while everything washes out. “But what about 2001?” you might ask. “Wasn’t the markets still very soft in September?” Good for you for paying attention to the world around you. There are exceptions to every rule.
Perhaps George Bush just couldn’t believe he had actually been elected president or was just so darn happy about it that all he wanted to do was party so he did. Instead of establishing any real policies during his first 6 months (actually right up until 9/11) in office he spent much of his time congratulating himself, trying to appear presidential, and playing golf. Since the market had been unable to gauge the new guy it continued to weakening as some of the plebeians also started to liquidate at least some of their assets. Predictably the 9/11 attacks pretty much finished off the markets with the plebeian investors losing roughly 70% of their assets with managed retirement funds taking the biggest hits.
This election the markets have been pretty stable all things considered. Why? The only rational answer is that Wall Street believes that by hook or by crook (probably by crook) that the fix is in. The markets didn’t change much because the markets expect the status-quo to continue without any interruption. They already know what to expect from Hillary Clinton because they own her. Friday changed all that and the markets reacted to uncertainty. The Mexican Peso tanked. Why? Because of Trumps stand on trade with Mexico. American companies will likely have to pay stiff tariffs to sell their wares across the boarder and sell them to Americans many of whom do not realize that their “American Made” car is actually a product of Mexico. How about the oil markets they tanked too right? Of course they did because if Trump gets elected oil and gas companies will have to compete with coal again. And without going through the entire stock list I’m quite sure that any America company making things in Mexico also saw a drop in their stock prices on Friday.
Markets often have downward turns on Fridays but whatever the real truth is, that will be exposed on Monday when the markets will tell us what is really going on behind the scenes. Once again there can be only 2 outcomes. In the morning no matter what, the market is going to slip further down to wash out the suckers. Don’t forget there are winners whether these stocks go up or down and in the investment market someone has to lose. The real power is going to want to take advantage of that. As the clock ticks towards noon (ie lunch time) the market will revel itself (when plebeians and weak brokers are out to lunch) . It will either begin to recover or continue to nose dive. A downward movement in the market means the market has lost faith in an easy (fixed) Clinton win and recovery means they expect by hook or by crook (likely crook) that Hillary will be elected president and nothing will fundamentally change.
So what happens if the markets continue on a downward spiral? Oh that’s easy haven’t you plebeians been paying attention? As sure as the sun rises in the east the mainstream media will blame Trump for any downward market movement implying that people must vote for Hillary or face a possible economic collapse. Some are jumping the gun a bit and are implying that now. Several analysts have been talking about a global economic bubble about to bust for months (some for years) and if it does any time between now, election day, or inauguration day the press will absolutely blame Donald Trump (not 8 years of progressive liberal economic failure).
The game is afoot but if you know the rules you can predict the outcome. Just pay attention to the details because they is where the devil is always hiding.
The opinions expressed in this commentary are solely those of the author and are not not necessarily either shared or endorsed by iPatriot.com.