Although President McKinley was assassinated
during his first year in office, three of the four years were stock market
bears.
The DJIA Index was congruent with
presidential election cycle historical standards with market falling in
the post election year of 1901. Although the classical temporary bottom
was found in the mid-term election year of 1902, the stock market bear
enjoyed success in the pre-election year of 1903 contrary to historical
expectations of stock market bullishness. This was the most bearish
pre-election year since 1832.
The first auto show sparked a bullish
response and the Wright brother's first flight contributed to
a cyclical bottom during a half-way point of the 1902-1904 recession. You
will later see how the market does not always anticipate or respect
economic recessions. Human emotion is the biggest market driver, which is
not quantifiable in and of itself, while the stock market does an
excellent job of gauging it.
Notice the bearish response to President
McKinley's assassination. You will later see how the market reflects
changing human morals and values, as political assassinations in future
years demonstrated little influence on the stock market. Without any
intended disrespect for the deceased, the markets recognize that political
leadership's only positive impact to free markets is to undo their prior
damage. Thus, the market increasingly shows little respect for
presidential mortality.
Capitalists are providers of increased
quality of life. Politicians take away. Free markets invest in
capitalists; not politicians. Although the stock market generated a
bearish response to President McKinley's assassination, you will notice
future such events were less responsive. Not meaning to be insensitive,
the capital markets eventually recognized the economic irrelevance to
presidential deaths.
