Did Obama Make the Greatest Stock Call Ever?

If you bought stocks when Obama said to in 2009, you'd be up 117 percent today

ObamaStocks2.jpg.jpg
(Reuters)

It was March 3, 2009, and the financial world was going to hell. 

The economy had shed over 650,000 the month before, and the banks were still perilously close to oblivion, despite TARP and the alphabet soup of lending programs the Fed had launched to prop them up. Indeed, Citigroup would become a penny stock just two days later. 

It was DOW 36,000 ... minus 30,000. And President Obama thought it looked like a good time to buy some stocks. Here's what he told reporters in his pseudo-CNBC audition:

What you're now seeing is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you've got a long-term perspective on it.

That's some great analysis! If you look at Yale economist Robert Shiller's data on the S&P 500, cyclically adjusted price-earning ratios were at a fairly reasonable 13, down from 27 at the market's all-time height in October 2007 (and over 40 during the tech bubble days). Four days later, share prices bottomed -- and then proceeded to melt up.

How's that for timing the market?

ObamaS&P5001.jpg


If you had bought stocks when Obama said to, you'd be up over 117 percent today. And you wouldn't even have to pay any fees for his financial advice (unless you count federal taxes).

Am I being a bit silly? Yes. This monster rebound clearly had nothing to do with what Obama said -- the Fed expanding QE1, and rumors thereof, turned the market around -- but it is a reminder that you should listen to somebody who controls some of the levers of economic policymaking when they say the market looks good. Japan is taking this to its logical conclusion after its economic minister announced he wants the Nikkei to go up 17 percent in the next month alone. It's a crazy plan. Crazy enough that it might just work. The Abe government has put unprecedented pressure on the Bank of Japan to finally whip deflation now, and that, with some fresh fiscal stimulus thrown in, has been enough to shock consumer confidence up

Anybody at CNBC wanna ask Obama how the Nikkei looks?
Presented by

Matthew O'Brien

Matthew O'Brien is a former senior associate editor at The Atlantic.

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well. Bestselling author Mark Bittman teaches James Hamblin the recipe that everyone is Googling.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well.

Video

Before Tinder, a Tree

Looking for your soulmate? Write a letter to the "Bridegroom's Oak" in Germany.

Video

The Health Benefits of Going Outside

People spend too much time indoors. One solution: ecotherapy.

Video

Where High Tech Meets the 1950s

Why did Green Bank, West Virginia, ban wireless signals? For science.

Video

Yes, Quidditch Is Real

How J.K. Rowling's magical sport spread from Hogwarts to college campuses

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

More in Business

Just In