After the 9/11 attacks, George Bush told us all that it was our patriotic duty to shop:
I ask your continued participation and confidence in the American economy. Terrorists attacked a symbol of American prosperity; they did not touch its source.
Yesterday, in the midst of the worst recession in the generation and a stock market that has lost more than 35% of it’s value, Barack Obama told Americans to go buy some stock:
WASHINGTON (AP) — As Wall Street tumbles, President Barack Obama offered up some investing advice on Tuesday, telling a wary nation that stocks are becoming a “a potentially good deal” for those willing to think long term. The White House later cautioned people not to read too much into the statement.
Obama also said he will not base policy on what he called the “day-to-day gyrations of the stock market.” The Dow Jones industrial average fell again Tuesday after plunging on Monday to it lowest level in more than 11 years.
The index has lost more than half its value since a record peak in October 2007. The toll on retirement plans, college savings and nest eggs has been huge.
“You know, the stock market is sort of like a tracking poll in politics,” Obama said during an appearance with British Prime Minister Gordon Brown. “It bobs up and down day to day, and if you spend all your time worrying about that, then you’re probably going to get the long-term strategy wrong.”
Yet lately, Wall Street’s direction has been down, period. Investors are in despair over the state of financial companies, the deepening scope of the recession and doubts about the government’s various attempts to bolster the banking sector and create jobs.
(…)
And then he sounded a bit like a financial adviser by referring to a common measure used to assess whether a stock is overvalued or undervalued.
“What you’re now seeing is profit and earning ratios starting to get to the point where buying stocks is a potentially good deal,” he said, “if you’ve got a long-term perspective on it.”
Obviously, this is a case of Obama trying to “talk up” the stock market, to trade to convince traders and the public that things aren’t as bad, or as uncertain, as the performance of the stock market would make it seem.
From a political point of view, it’s a logical strategy.
From a financial point of view, it’s completely and utterly insane.
Look at where we are today. The stock market has lost nearly 40% of it’s value since September. As measured by the Dow and the S&P 500, it’s more than 50% off it’s all time high (the NASDAQ is nearly 75% below the 2000 all-time high that it never recovered from after the tech boom died). Some analysts are saying that there’s the potential for at least another 33% drop before we see a bottom.
And he’s telling people who are worried about losing their jobs and paying the mortgage to invest in the market ?
Neil Boortz summed this insanity up best:
Is he kidding? He’s waging an all-out war against capitalism, and he wants us to buy stocks? This man who wants a government-controlled economy wants us to invest in the stock market? This is like the Surgeon General telling us to go out and have unprotected sex with drug addicted street walkers. Yeah … let’s all do that!
Makes perfect sense, if you’re willing to risk losing everything.
H/T: Jason Pye
You don’t buy when the market is in free-fall. You buy at the bottom. That isn’t in sight yet.