President Wilson lead three stock market bears during his first four
year's in office. He was an extraordinarily meddlesome president.
Despite his egomaniacal condition, the pre-election year was
extraordinarily bullish, which is a common theme during the manufacturing
of weapons and ordnance for a major war-time build up.
DJIA Index is congruent with presidential
election cycle historical standards with market falling in the post
election year of 1913. The great Charles E. Sorensen of Ford Motor company
developed the first mass production line, which was copied by hundreds
of manufacturing companies over the next fifty years. For example, Emerson
Electric's CEO copied the "Ford System" in the 1920's. That lowered the
cost of manufacturing electric fans by over 80%. Shigeo Shingo, a
consultant for Toyota, improved Sorensen's methods from the 1950's through the 1970's, while providing recognition to
Sorensen's efforts sixty years earlier. Dr. Edward Deming and General
George C. Marshall had nothing to do with the greatness of Shingo's
achievements. They are erroneously recognized for Japan's economic success
following World War II. Now, back to the current situation of 1913-1917.
Unfortunately, as you can see, the creation
of the Federal Reserve was not inspirational to the stock market bull. The
outset of World War I, WWI, did not help. As you can see, the stock market
dropped significantly at bear signal #01 in 1914. This resulted in
the Indicant losing a little, but buy and hold lost the same.
You will later notice how human mores and
morals have changed since this era. The onset of World War I was reason
enough to close the stock market for several weeks. That is why there are
no data points in late 1914 and thus the reason for the flat line. You will
later see that wars no longer justified the closing of the stock market.
You will also later see that wars are actually bullish for the stock
market. For example, FDR needed a war to cover up his incompetence.
President Woodrow Wilson's so-called
"progressive movement" certainly did not arouse economic robustness. The
folks at institutions, such as Princeton, learn all the words in the
dictionary and figure out how one of them sounds better than "master
thievery." They then use it. Henry Ford was progressive; President Wilson
was not progressive. He simply new fancy words from the dictionary. No
politician has ever been progressive. On the contrary, they slow real
progress, while Henry Ford's vocabulary was not match for Wilson's. What
is more important; knowing the most words in the dictionary or make
millions wealthy through the production of the automobile?
Woodrow Wilson had a harmonistic
relationship with Congress. Consequently, the stock market bear expressed
its approval with profound bearish magnitude, while Wilson and his
intellectual pals enjoyed the good life. The American people were stupid
enough to grant Wilson a second term, which is common during war. Rest
assured, all politicians know that and rank their re-election of higher
importance than body count from war..
The market anticipated the 1913-14 recession
by about five months, which is close to the expected anticipation cycle of
six to eight-months. You will later see how the market does not always
successfully anticipate recessions - at least not directly.
The stock market bear was aroused with the
income tax amendment in early 1913 and
the creation of the Federal Reserve. The stock market bear demonstrated
its punch with those two horrible events. The economy
followed with a recession. Of course, the economy rebounded well, as WWI
matured. FDR learned this little trick for WWII.
One reason the Indicant performed exceedingly
well against Buy&Hold is ten years of flat market
performance with pronounced cyclical behavior.