I don't understand why the stock market has performed so badly. Down about 25% since the election, and down about 12% since the day before he took office. Sure, there are plenty of other factors driving the market. But he gets high marks from the American people. The NYT noted on Monday that "President Obama is benefiting from remarkably high levels of optimism and confidence among Americans about his leadership, providing him with substantial political clout as he confronts the nation’s economic challenges..."
I watched his address to Congress (really to the nation) on Tuesday and I was impressed. He didn't pull any punches in his sobering assessment of the current state of affairs, yet he offered an optimistic view of the future. Troubles? Sure. But we'll get through them. We're Americans-- this is what we do and have always done.
It's hard for me to believe that the stock market hasn't registered the slightest bit of optimism over the stimulus package. Is it perfect? Certainly not. But, as the Obama administration likes to say in paraphrase of Voltaire, let's not let perfect be the enemy of good. They're pouring lots of money into the economy. Some of it will wind up (indirectly) in the stock market. Someday soon, the market will rally, and your favorite TV market expert will explain that the rally has been caused by favorable effect of the stimulus package.
I was amused by the commentary about Sec. Geithner's plan to address the financial crisis. "No details!" "A plan to have a plan". A market pundit explained today that the markets need transparency regarding the government's plans, and those plans are currently quite vague. But it's just not possible to set a detailed plan to cope with a crisis that's continually changing. And if Geithner had offered a detailed plan, that plan would have undoubtedly been picked apart by critics and frontrun by traders. If I were the Treasury Secretary and I did develop a good plan to attack the crisis, the last thing that I'd do would be to show all of my cards. The US government can be very powerful. Who knows whether their plans will ultimately succeed, but I'll bet that they can have a significant positive influence on the markets and the economy at least for some period of time. And Obama's strong popular support will help to propel that influence. I'm not saying that they've found the solution. However, up to this point they haven't received any credit from the market, and they deserve and will get at least some.
Feel free to comment on my liberal bias or complete misunderstanding of basic principles of economics.
It takes courage to be a good investor. The easiest time to buy stocks is when they're going up, and the higher they go, the easier it is to buy. We all tell ourselves that we want to be contrarians, to buy the dips. But bottoms are made when even the bulls are filled with self-doubt. Could I just be plain wrong? Maybe, but I'm hanging in there.