An interesting article can be found here about the 3rd year of Obama’s 4 year term and the possibility of a stock rally. It seems that history shows (see chart below from that article) that the third year of each term for the Presidents Reagan, Bush Sr., Clinton, and Bush were good years for the market.
The author of the article speculates that the reason for this is because the first two years, a new President is trying to get his agenda enacted and is not concentrating as much on the economy. After the midterm elections he is then more focused on getting reelected which means he will do more things to boost his approval ratings and to boost the economy. A good economy going into an election means a greater chance of getting elected.
While the new Obama tax package was just passed one might argue that things are already happening along those lines. With investors and companies knowing that their taxes are not going to be raised for the next two years, things are already looking good for the business environment.
But wait a minute.
Didn’t Obama already throw everything he had against the wall trying to stimulate the economy in his first two years? What about a little thing called the Obama stimulus bill in the amount of 787 BILLION! How much more can he do to try to stimulate the economy? Seems to me like he’s got very little left and that new Republican House is not going to let him get away with other reckless spending like that.
No, Obama was trying his hardest to stimulate the economy in the first two years and he clearly failed. He gave away our tax dollars and flushed them down the toilet like all Democrats seem to do. Whatever happens from this point will be more of a result of the Republicans who are there to put a stop to all his shenanigans.
If there is an Obama stock rally in 2011, it shouldn’t be called that. It should be called the return to sanity rally.