Wednesday, November 05, 2008

I can't help noticing...

....that the day after Barack Obama and Joe Biden won, the DJIA dropped almost 500 points. Now certainly that news isn't as big as it once would have been, but I have to wonder if the stock markets are taking this into account.

Also along those lines, I follow four stocks each day, three that sell mostly to the private sector, and one that sells mostly to the government. One of those stocks rose today. Guess which one it was.

6 comments:

Shawn said...

nah, has nothing to do with it. intrade's been heavily favoring obama with the electoral vote unchanged for 6 weeks. any change regarding obama was already factored in, as the information was nearly certain.

Bike Bubba said...

You sure? Down 700 points now. I think investors not in Intrade (those who do it for a living) are saying something pretty clear.

The government supplier is down now, too.

Shawn said...

...if prices reflect all knowledge at a given time, it was already priced in. There's no new information to affect prices, as far as the election is concerned, so I'd put money on it being other effects.

I'm not just pulling this out of my butt...we did discuss this in micro several weeks ago.

Bike Bubba said...

As the Spartans said, "if," and "if" that were true, why bother voting? Before, it was likely, now it is certain. Moreover, he's starting to name the people who will help him.

That's new information, and that's (among other things) what the markets are responding to.

Shawn said...

yes, what I'm saying is that it was so certain (intrade had the same electoral college vote results for the last 6 weeks, which were dead on following the final results) that it was already priced in. IF the best guess was that obama was going to win, and then mccain won, THEN I would submit to the idea that any market change would be due to the presidential election.

So, in no way am I saying "why bother voting"...I'm saying that there's no way that the presidential outcome is affecting the market, because that knowledge is already priced in. that has nothing to do with whether we should bother voting or not.

Now, he has named the chief of staff, and maybe that has effects, I'll admit that.

Bike Bubba said...

Understood, but the simple fact that people bothered to show up at the polls and cast 56 million votes for McCain (only 2 million less than W got, if I remember right) shows that it wasn't that obvious to everyone.