The Social World

Tag: Stock market

  • Are AI stocks about to crash?

    Are AI stocks about to crash?

    Bitcoin has lost almost a quarter of its value. The tech-heavy NASDAQ index on Wall Street has started to fall. And even leaders of the industry, such as the Google CEO Sundar Pichai, have started to warn about valuations getting out of control. We already knew that AI was driving a boom in investment. But this week there are worrying signs the market is about to crack. The only real question is whether that turns into a full scale crash.

    Bitcoin, as so often, is leading the market rout. More than $1 trillion has been wiped off the value of the crypto market over the last six weeks, with Bitcoin itself down by 28 percent since its peak. But that is just part of a wider fall in tech and AI stocks, with the chipmaker Nvidia, which has powered much of the boom, starting to slide, along with many of the other stars of the AI boom. Plenty of stock market experts are starting to think it is looking like a bubble that is about to burst. Indeed, Michael Burry, who became famous in the crash of 2008 and 2009 for accurately predicting the collapse of the market, has started betting against the sector.

    There are many worrying signs. The leaders of the boom have reached extraordinary valuations. Nvidia is up by over 1,300 percent over the last five years, and earlier this year became the first company to reach a market value of $4 trillion. It was quickly followed by Microsoft, which has soared mainly on the back of its stake in the leader of the AI boom ChatGPT, which itself became the most valuable start-up ever with a funding round that made it worth $500 billion. Meanwhile every company that managed to attach itself to the boom, no matter how spuriously, has seen its share soar. Goldman Sachs estimates that AI stocks have added $19 trillion since ChatGPT was launched, a huge run-up in valuations.

    It is starting to look very like the dot com bubble of a quarter century ago. There is little question that AI is a valuable technology, and one that is starting to have a real impact. At the same time, there is far too much hype, no one has quite figured out how to make money from it, and no one has any real idea which of the new companies will turn into the long-term winners. 

    This week may or may not turn out to be the moment the bubble bursts. In reality, every investment boom has lots of sharp corrections as it soars upwards, and there is nothing very unusual about a fall of 5 percent or 10 percent in prices before the market starts climbing again. It is only when there is a final “melt-up” that it becomes dangerously over-valued. The AI boom does not look like it has reached that point yet. But there is little doubt that it is turning into a classic bubble. It will be very messy when it finally bursts.

  • Andrew Ross Sorkin reconstructs the 1929 crash

    Andrew Ross Sorkin reconstructs the 1929 crash

    During the great financial panic of 1907, the banker J.P. Morgan locked the titans of the financial world in his lavish private study to determine which banks to rescue and which to let fail. This intervention saved the banking system, restoring public confidence. But trust in Wall Street was shaken to its core. Six years later, Congress passed the Federal Reserve Act, which sought to stabilize the American financial system by establishing a central bank to regulate credit and serve as lender of last resort. By the mid-1920s, the very mechanisms that were designed to promote stability had fueled a surge in stock market speculation. In 1929, a narrative history of this feverish bull market and its tragic unraveling, Andrew Ross Sorkin seeks to illuminate “the most significant – and largely misunderstood – financial disaster in modern history.”

    Throughout the 1920s, National City Bank and its securities affiliate, the National City Company, had extended credit to investors and brokerage firms, allowing stocks to be purchased with as little as 10 percent deposit. Margin loans increased sixfold over the decade. Once confined to professional investors, stock speculation became a national pastime as Americans borrowed their way into the booming market. At the start of the year, the surging “Coolidge market” had begun to resemble a bubble. As Sorkin writes: “On February 2, the Federal Reserve Board in Washington, fearing that a speculative bubble was taking hold, issued an advisory to the Fed’s regional banks, discouraging them from making loans to support stock speculation, particularly stock that was bought on margin.”

    In an attempt to cool this market, the New York Fed had moved to raise the discount rate from 5 to 6 percent. “The Fed’s killing the goose which laid the golden egg,” complained Charles Mitchell, National City Bank’s president and chairman. To persuade the president-elect, Herbert Hoover, to take his side against the Fed, Mitchell called upon the influential auto magnate William Durant. “I’m sure there’s a way we can get to Hoover,” Durant reassured him.

    Sorkin is at his best in his granular reconstruction of the unfolding collapse on Wall Street. He traces the months of 1929 week by week, from the Federal Reserve’s warnings about speculative lending in February to the cynical maneuvering of bankers and industrialists attempting to prop up the market. On March 26, defying the Fed’s tightening policy, Mitchell ordered his bank to extend loans, “no questions asked,” to support share prices. On another fateful evening, Durant, unvetted and uninvited, talked his way into the White House to privately urge Hoover to contravene the Fed.

    Sorkin’s 1929 reveals a gallery of tragic figures whose genius and folly shaped the destiny of the United States at a critical point in its history. There is Thomas W. Lamont, the impoverished minister’s son turned JP Morgan partner and de facto chairman of the bank; Jesse Livermore, the self-educated speculator who got his start running bets for organized crime in Boston before making millions as a short-seller; Carter Glass, a son of the Confederate South who overcame his lack of formal education to become the leading congressional expert on banking and a driving force behind financial regulation; and National City Bank’s Mitchell – or “Sunshine Charlie” – whose boundless optimism disguised his fatal hubris.

    On Thursday, October 24, as the bubble began to burst, Mitchell emerged from meetings with a consortium of bankers at the JP Morgan offices in Lower Manhattan. “I am still of the opinion,” he told the press, “that this reaction has badly overrun itself.” The “Big Six” bankers had formed a pool, injecting around $100 million into the market that afternoon. All of this was coordinated in secrecy. “If the public knew exactly what they were doing, it wasn’t clear whether it would instill confidence or undermine it,” Sorkin writes. It was to no avail. When the market opened the following Monday, October 28, the Dow suffered the largest single-day drop in stock market history. The rout continued into November. “In the space of just two months, the market had fallen by half, wiping out $50 billion, which represented about half the US gross national product.”

    The market rallied into the spring of 1930, recovering almost half of its losses. But then “the air simply leaked out of the balloon.” Credit markets had been eviscerated. On June 17, Hoover signed the Smoot-Hawley Tariff Bill, raising tariffs on foreign goods to an average of 60 percent, which worsened an already teetering economy. Then began a string of bank failures.

    Critical accounts of Wall Street, far removed from the hagiographic magazine profiles of the previous decade, began emerging en masse in the media. Meanwhile, Hoover made himself easy prey for the Democrats, who swept the 1930 midterms, a prelude to Franklin D. Roosevelt’s landslide victory in the 1932 presidential election. What began as a vote of confidence in the American system would ultimately empower Roosevelt to reshape it entirely.

    1929 revives a decisive episode in financial history amid renewed uncertainty about the resilience of American markets and the global economy. Based on eight years of exhaustive archival research, Sorkin’s study offers a rare combination of scholarly rigor and narrative verve. Implicit in his account is a cautionary insight: the very ambition driving America’s financial system ensures its perpetual vulnerability to excess and collapse.

    This article was originally published in The Spectator’s November 24, 2025 World edition.

  • Trump is not to blame for the crypto crash

    Hundreds of billions have been wiped off the value of the crypto currencies. A prominent Ukrainian blogger and influencer on digital coins has been found dead. This will likely be a rocky day for traders. We will have to see whether it develops into a full-blown crash or not. And yet, all the major equity indices were already wildly overvalued, and a correction was always inevitable – it was just a question of when it would start. 

    Investors will also see a few days of turbulence. An estimated $400 billion was wiped off the value of the main crypto currencies on Friday evening, while the Nasdaq dropped by more than 800 points, or 3.5 percent, before the New York stock exchange closed, with the S&P 500, the benchmark for US stocks, not far behind. When markets open in Asia and then Europe they are expected to fall heavily as well. 

    The trigger for the fall in prices was the resumption of the tariff wars. President Trump slapped 100 percent tariffs on China in a row over exports of “rare earths,” critical to much high tech manufacturing. In reality, however, the markets were already wildly overvalued. Over the summer, the price of every major asset has been soaring. The Nasdaq is up by over 30 percent over the last six months. The chip market Nvidia is up by 65 percent. OpenAI, the owner of ChatGPT, reached a value of $500 billion, a record for a private company. Gold went over $4,000 an ounce, and Bitcoin went over $120,000 a unit. Even Britain’s index, the FTSE 100, managed to rise by 15 percent despite a stagnant economy. After the collapse that followed the first round of tariffs in the spring, every major index has been on an epic bull run, and had been hitting all-time highs. 

    October is often a difficult month for the market. The Great Crash of 1929 started on 28 October. The Black Monday crash of 1987 was on 19 October. The financial crisis of 2008 was more drawn out, but is generally dated as starting on 6 October that year. No one quite knows why, but the historical evidence is clear enough: October is a bad month. We will have to see whether the latest round of nervous trading develops into a full-scale collapse. With little sign of a global recession, and with the Federal Reserve in the United States, still cutting interest rates, it still seems relatively unlikely. But a correction of 10 to 20 percent in asset prices is long overdue after the exuberance of the last six months – and it looks as if that has now arrived. 

  • Trump has gained the upper hand over China

    Stockholm

    This week, the fate of the global economy could have been decided over a Mongolian barbecue in a Stockholm tourist trap. On Tuesday, just 50 yards from Sweden’s seat of government, Rosenbad – where the US Treasury Secretary Scott Bessent and the Chinese Vice Premier He Lifeng had been wrangling over trade negotiations – the Chinese delegation suddenly exited the talks and headed for lunch near the Mongolian buffet place, where they had eaten the day before. Its windows were covered up and a sign announced it would be closed for three days for a “private event.” The Americans stayed behind, making do with salad.

    China, still the factory of the world, remains the biggest test of Donald Trump’s resolve

    The Chinese had left to “report back to the mothership,” as Bessent later put it. But the mothership apparently did not budge. After talks resumed, it soon became clear that no breakthrough agreement had been struck.

    China wanted another extension to its tariff truce with America, which expires on August 12. Bessent said that was a call for his mothership, Donald Trump. The Treasury Secretary seemed to hint that Trump would approve such an extension. “Just to tamp down that rhetoric, the meetings were very constructive. We just haven’t given that sign-off,” he said, diplomatically.

    The problem is that two major issues haven’t been resolved: fentanyl, and the Chinese support for Russia and Iran. On fentanyl, “we seem to have a sequencing problem,” said Bessent, delicately. The Chinese want Trump’s tariffs to be reduced before they take action to prevent the manufacture of the chemicals that make the drug, which killed 50,000 Americans last year. The US side wants things to happen the other way round.

    Moving on to Iran and Russia, Bessent said: “One thing we are not pleased with, I’m sure the President won’t be, but it’s no secret: the Chinese buying 90 percent of Iranian oil. They’ve contributed $15 billion in dual use technology to the Russian war machine.”

    Insiders and Chinese officials kept a nervous eye on Trump’s Truth Social media account for signs of an angry orange eruption. But Trump, returning from Scotland on Tuesday night, sounded sanguine. “They had a very good meeting with China, and it seems that they’re going to brief me tomorrow,” he told reporters on Air Force One. The President appears to be in a better mood than he was in February, when he seemed hellbent on exploding trade relations with the world and especially China.

    On rare earth metals and magnets, Bessent and his Chinese counterparts appear to have made progress, building on previous meetings in London. Other key topics that didn’t make it to the negotiating table were the future of TikTok and a possible meeting between Trump and Xi – “that’s at the leaders’ level”, the Americans said.

    Officials inside the room told me that most of that time was spent playing a civil but pointed game of “My economy’s bigger than yours”. 

    “We had a big exchange – a very long exchange – and briefings on the economies of both countries,” Bessent reported. The Chinese, he added, “believe that their economy is in good shape.”

    America’s aim is to rebalance China’s financial model – which Bessent calls “the most unbalanced economy in modern times,” the likes of which we haven’t “seen since the British Empire” – away from mass manufacturing and toward internal consumerism. This isn’t just about dollar dominance or bringing in an estimated $300 billion to the US economy from tariffs: it’s about changing China. “They believe that they have a robust consumer economy, and they do not believe that they have a manufacturing surplus that is making its way into the rest of the world. Which I disagree with,” said Bessent.

    Outside the nearby Sheraton and Diplomat hotels, bored police officers milled about. Anyone searching for drama had to look to the press corps, which consisted mostly of Chinese journalists. Trade talks are bigger news in Beijing.

    There was some fretting about “optics” from US officials. Representatives of the US Treasury were concerned about the white-walled room the Swedes provided for Bessent’s television appearance – “hostage vibes,” muttered one aide. A spat over the positioning of the Chinese and American flags outside Rosenbad was also rumoured.

    What’s clear is that Trump has gained the upper hand in the trade war. When he unleashed his tariffs on what he called “liberation day,” the global expert consensus was clear: disaster. The tariffs, we were told, would amount to the largest tax hike on Americans since the 1910s. Inflation would soar. Growth would stall. Businesses and capital would flee.

    But the orthodoxy has, so far at least, been proved wrong. The numbers have come in better than expected. Inflation has stayed close to the 2 percent target. Almost 800,000 jobs have been created this year. Second-quarter GDP is expected to grow at a healthy rate of 2.4 percent. The stock market has rebounded sharply and is up nearly 10 percent since Trump’s re-election. The forecasts were pessimistic.

    America has won in Europe too. Europe has agreed to invest some $1.4 trillion into American energy and infrastructure in exchange for a reduced yet still significant tariff rate of 15 percent. The French Prime Minister called it “submission”.

    America has won in Europe too

    America has effectively challenged Europe to pick a side, Washington or Beijing, and for now Europe has chosen Washington. “I don’t know if they have our back,” said Bessent, “but clearly, the European relationship with the Chinese had a substantial deterioration.” As the US put up the tariff wall, the door opened for increased trade flows between Europe and China.

    According to Bessent, however, the EU has decided that being flooded with more cheap Chinese goods – while Beijing continued to protect its manufacturing at every turn – is not an economic blessing.

    “I had told them: this is what’s going to happen,” says Bessent. “There is now much more unity between the US and the allies. They’re now seeing the downside [of China] the US has seen.”

    The tariff regime, then, has frightened the world away from its dependence on a frequently malevolent Chinese superpower. Trump’s madman tactic makes everyone crazy, but it appears to have worked. The fear that Trump really might go all the way with his threat of 100 percent-plus tariffs, never backing down, has enabled him to walk things back toward normality while achieving his objectives.

    China, still the factory of the world, remains the biggest test of Trump’s resolve. But all sides know that, as America settles its trade disagreements with the rest of the world, it is Xi Jinping who now most needs the tariff pause to continue. 

  • Deals, deals, deals vs China, China, China

    Deals, deals, deals vs China, China, China

    How was your Liberation Month? It’s been almost 30 days since Donald Trump stood in the Rose Garden of the White House and announced a shocking set of massive tariffs on the world. The event caused huge convulsions in the economic universe: trillions were wiped off the stock market and, under huge pressure, Trump did agree to a 90-day pause on reciprocal tariffs. After that he exempted electrical goods, though his standard 10 percent remains, and the heads of most financial analysts are still spinning trying to figure out what it all means.

    Yet for all the angst and the apoplexy, yesterday the S&P 500 index closed just 1 percent down from where it was at the beginning of the month. The “Trumpocalypse” hasn’t happened yet, though there are plenty of troubling signs of more bad economic news to come. US Commerce Department figures released yesterday show that, in Trump’s first 100 days, America’s gross domestic product shrank by less than half a percent, having grown at a solid clip of 2.4 percent in the final months of last year. Consumer spending and confidence are down and, according to a study from the non-profit Conference Board, “tariffs” have now replaced “inflation” as the leading money-related concern among Americans.

    For Trump, however, bad news must always be a prelude to good. In the coming days, the Trump administration will endeavor to roll out a series of measures intended to mitigate the negative impacts of his tariffs. A tax cut for the American middle class is on its way. And Trump will go back to doing what he loves the most: deals, deals, deals. His trade adviser Peter Navarro, Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick have all suggested that a major new agreement with India, the world’s fourth-largest economy, is nearly complete. Trump officials also believe they have made major strides towards a new deal with the European Union.

    Brexit Britain is, it seems, not at the back of the free-trade queue, as Barack Obama once predicted. But we aren’t at the front, either. According to a Guardian scoop, Team Trump has planned to phase its trade negotiations with more than a dozen countries, and the United Kingdom is part of phase two or three. Whether that is true remains to be seen.

    On another front, a warring one, Bessent yesterday signed the controversial minerals deal with the government in Kyiv. Nobody knows if the agreement will lead to peace between Russia and Ukraine. But, as Secretary of State Marco Rubio has made clear, America’s intention is to lock its interests to Ukraine’s future – and, while Volodymyr Zelensky did not get all the security guarantees he wanted from the world’s pre-eminent military power, it’s clear that the second Trump administration is not, as many have alleged, simply giving Vladimir Putin everything he wants.

    The Trump administration’s overriding concern is not Russia, however. It’s China, China, China. And the most significant consequence of Liberation Day, by far, has been that the world’s two biggest powers are now engaged in a full-blown trade war. America has imposed a 145 percent tariff on Chinese goods (excluding electricals); China has retaliated with a 125 percent charge on US goods. It seems inevitable that such crushingly large levies will cause significant pain to American consumers and businesses. Since Beijing runs a $350 billion annual trade surplus with the US, however, it’s worse news for America’s biggest rival. Chinese manufacturing activity plummeted last month. The Chinese Communist party has vowed to fight Trump “to the end” on trade. But can Beijing really do that without collapsing its own economy before America’s implodes? If Trump succeeds in brokering a series of comprehensive free-trade deals with other major powers in the coming months, the answer is probably no. As we enter the next 100 days of Trump 2.0, that must be the biggest “if” in world politics.

    The above is taken from Freddy Gray’s weekly Americano newsletter. To subscribe click here.

  • The market crash is not as bad as it seems

    The market crash is not as bad as it seems

    It’s that moment of supreme uncertainty. We do however know the question. Is this a regular sell-off, with the S&P 500 nudging into bear market territory, but then steadying in the next few months before a gradual recovery? Or is this a true crash, akin to those of October 1929, October 1987, October 2008, or most recently March 2020, in which case we are less than halfway down the peak?

    The strategists have of course been crawling over the data of previous crashes, but the analogies never really fit. There has not been a trade war akin to what may be developing now since the 1930s, when the world economy was both less integrated and more fragile. The confident predictions of a couple of weeks ago that US equities would end up this year now look rather silly. Being clever doesn’t help. 

    We can however say two things. One is that sudden vicious crashes are rare. Longview Economics, a London-based consultancy, calculates that those four noted above are the only ones on that scale in the past 100 years. The other is that bear markets are totally normal. There are lots of them, 27 on the S&P 500 index and its predecessors since 1923, with an average decline of 35 percent. Unlike those sudden crashes, a classic bear market decline typically takes between nine and ten months, and they come through on average every three-and-a-half years. Hartford Funds has a handy tally here. If you accept that what’s happening is normal – that Donald Trump’s tariffs have simply triggered a decline that would probably have happened anyway – then figuring out what might happen becomes a little easier. 

    We also learnt something new yesterday about this current plunge. It was that any sort of softening of Donald Trump’s tariffs would check the crash, though not necessary stop a longer bear market decline. The sniff of a delay in the implementation of the tariffs was enough to push up prices for a few minutes, then when it became clear it was simply a rumor, markets duly flopped back.

    There are four reasons why what we’re seeing in the market is not as bad as it seems:

    1. Whatever happens in the next few days, the overwhelming probability is that this will turn out to be a classic bear market lasting several months, with equities falling by at least another 10 percent. The reason: the market was over-priced and it was simply a question of what would trigger the fall
    2. The tariff war will have an outcome, in the sense that it won’t rumble on for years. We are talking a few months before an accommodation with the US’s major trading partners is secured
    3. There are a couple of helpful analogies. One is the dot-com bubble. The overvaluation of high-tech America now is not as serious as in 2000. The other is the banking crash of 2008. This is, or at least may develop into, a trade crash. But trade disruption is easier to fix than banking disruption. Commerce is more resilient than finance
    4. If those three points are more or less right, then while the next few months will be difficult, the overall loss of global output will be less serious than the recessions what followed the dot-com bubble and the banking crash. There may or may not be a US or European recession, but they won’t be serious ones unless there is some further negative event. We are looking at a mid-cycle pause in global growth, not the end of the expansion period

    There is, however, one overarching concern. It’s the financial fragility of the US – the size of the fiscal deficit and the reliance on the rest of the world to be prepared to hold yet more US treasury debt to fund it. The destruction of wealth that has taken place over the past few days is huge. A month ago three of the “magnificent seven” – Apple, Microsoft and Nvidia – were all worth more than $3 trillion. Now, none of them are.

    Also, until yesterday the yield on US treasury notes was falling, with 10-year Treasury notes trading below 4 percent overnight. Then during the course of the day yields climbed to 4.2 percent. That’s still way down from 4.8 percent in mid-January, when Treasuries were helped by expectations of further cuts in interest rates by the Federal Reserve, but Monday was a nasty time for bond holders. So while the broad picture is that international investors have been prepared to carry on financing the US deficit, despite their countries being attacked by tariffs, you have to ask whether they will continue to do so. 

    Final thought. We are seeing a well-known market phenomenon unfold. Everything takes longer to happen than anyone expects, then when it does come, it always does so more violently. Remember the interchange in Ernest Hemingway’s The Sun Also Rises?

    “How did you go bankrupt?” Bill asked.

    “Two ways,’ Mike said. “Gradually and then suddenly.”

  • Trump’s 25 percent tariffs on Canada and Mexico take effect

    Trump’s 25 percent tariffs on Canada and Mexico take effect

    “He was bad on trade, very bad on trade,” said Donald Trump “with due respect” to Ronald Reagan in a broadcast from the White House. As the president went on, the Fox News coverage included a “Dow Watch” ticker, which showed the markets in free-fall.

    Trump was speaking to confirm that 25 percent tariffs would be imposed at midnight on Tuesday on Canada and Mexico, with an additional 10 percent tariff for China (which has already had 10 percent tariffs imposed). This means new barriers for America’s three largest trading partners. “The tariffs, you know, they’re all set. They go into effect tomorrow,” Trump said.

    In response to the tariffs announcement — which markets do not seem to have fully priced in — the NASDAQ Composite fell 2.6 percent, while the S&P 500 Index finished the day 1.8 percent down, just worse than the Dow Jones Industrial Average, which was 1.4 percent down. Quite the contrast to Trump’s words on Sunday, when his announcement of a state crypto reserve added $250 billion to the market value of cryptocurrencies in just a few minutes.

    Meanwhile, the Federal Reserve Bank of Atlanta released its latest "nowcast" for GDP, forecasting that in the first quarter of the year, America’s economy will have contracted by nearly 3 percent. If the forecast is right — a big if, in fairness to the president — this "Trumpcession" would be the fastest economic contraction America has experienced since the pandemic. Just last month, the same model forecast growth of nearly 4 percent. The GDP decline is not just a result of tariffs but a slew of bad US economic data in recent days, including falling retail sales and consumer sentiment.

    But markets are fickle, forecasts are fallible and both abhor the uncertainty that the Trump White House loves to create. Don’t be surprised if the president extracts his demands and tariffs are lifted just as quickly as they’ve been implemented — and don’t be surprised if Trump’s next television appearance has markets on the rise. It might be time to buy the dip.

  • Why the Biden stock market is even worse than you think

    Why the Biden stock market is even worse than you think

    If you’re the sort who rarely checks your 401K and other investment accounts, you may be blissfully unaware of what a dismal year (plus) its been for the stock market.

    Many prominent media personalities, particularly ones on CNBC, promised us that Biden would be a boon to the stock market because Trump was too erratic. But while the market started hot in 2021, it’s mostly been ice cold ever since, with a few fake rallies thrown in to tease us. How bad has the Biden era been for stocks? Consider some numbers I crunched prior to the market opening on December 12. (Note that I looked at the S&P 500 and the tech/innovation-heavy Nasdaq as a barometer of market health, rather than the Dow, because the former indices encompass a broad range of stocks, whereas the Dow is often misleading because it’s just thirty companies.)

    S& P500 Index
    Trump era from his inauguration to his last day in office: 2,271 on January 30, 2017 to 3,798 on January 19,2021. Gain/loss: +1,527; 1,527/1,461 days in office = 1.04 points gained per day

    Biden from inauguration to December 12: 3,851 on 1/20/2021 to 3,939 on 12/12/2021. Gain/loss: +88; 88/691 days in office = .12 points per day

    Nasdaq Index
    Trump era from his inauguration to his last day in office: 5,556 on January 20, 2017 to 13,197 on January 19, 2021. Gain/loss: 7,641 points gained; 7,641/1,461 days in office = 5.23 points gained per day

    Biden from inauguration to December 12: 13,342 on January 20, 2021 to 11,015 on December 12, 2022. Gain/loss: 2,327 points lost; 2,327/691 days in office = 3.36 points lost per day

    In the Trump era, investors enjoyed about a one-point gain per day on the S&P, while they’ve seen about a tenth of that during the Biden administration, with nearly all those gains clustered in the first half of 2021. The Nasdaq, which is full of tech and innovation stocks like Google (Alphabet), Microsoft, Apple, Amazon, Tesla and many other household names, has been even more of a train wreck for investors. While the Nasdaq index gained more than five points a day on average during the Trump years, it’s lost more than three points per day on average during the Biden years. Remember when Mark Cuban said the stock market would “crash” if Trump was elected? He and others were just a bit off on that score.

    As ugly as the numbers are, the reality is much worse for many individual investors, particularly those like me who have aggressive growth portfolios and those who hold individual equities rather than exchange-traded funds (ETFs) or mutual funds. Unless you have a mutual fund or ETF that closely replicates the performance of the S&P or QQQ, which replicates the Nasdaq, chances are your returns are even worse than the indices. (The S&P is down 16 percent as I write this for the year, and the Nasdaq is down 28 percent.)

    Here’s the year-to-date performance of some widely held equities as of 12/13:

    Amazon: down 45 percent
    Google: down 34 percent
    Nvidia: down 38 percent
    Zillow: down 40 percent
    Tesla: down 54 percent
    Disney: down 39 percent
    Nike: down 33% percent
    Microsoft: down 24 percent
    Meta/Facebook: down 64 percent
    Home Depot: down 20 percent
    Bank of America: down 26 percent
    Salesforce: down 47 percent
    Starbucks: down 13 percent
    Netflix: down 46 percent
    Roku: down 77 percent
    Citigroup: down 23 percent
    Advanced Micro Devices (AMD): down 50 percent
    Target: down 35 percent

    It’s been a brutal year for most stocks, and the indices don’t fully tell the story. That’s especially true if your portfolio is light on energy stocks like Exxon Mobil (up 75 percent this year) and Chevron (up 48 percent), as well as high-quality divided stocks and other relative outperformers, like Caterpillar, T-Mobile, Visa, and Walmart. Most experts identify inflation as the primary culprit behind the market’s dismal showing, particularly in growth stocks, because the value of those equities is linked to future earnings, which are devalued in inflationary times. The growthiest stocks, all for currently unprofitable but potentially promising companies, have been obliterated.

    The financial news cheerleaders in the media sold the public on the idea that Biden would be great for stocks, particularly widely held ones, like tech stocks. Consider, for example, Jim Cramer, the host of CNBC’s Mad Money, who is probably the most popular stock picker show on television. He said during election week that the Biden administration would be “nirvana” for growth stocks. Oops.

    Before the election, Cramer pimped hard for Biden on his show, claiming that at least two thirds of the stocks he managed as part of his charitable trust would do better under a Biden administration. He claimed that Democrats would better manage our relations with China, benefitting Apple and other tech companies. Then he claimed Disney, Nike, Starbucks, Boeing, Microsoft and others would “roar” during a Biden administration. You can see the “roaring” performance of those stocks above. Cramer said the only stocks that might benefit from another Trump term were the “un-investable coal, gas and oil industries.”

    Cramer repeated the word “uninvestable” to drive home his point. But these stocks have killed it during the Biden years. As stated above, oil stocks have hummed and so have many big coal stocks, like Alliance Resource Partners (up 70 percent this year), CONSOL Energy (up 209 percent), and Peabody Energy (up 177 percent). Cramer’s bottom line, repeated by many others in the woke media, was that Biden would be good for stocks, and the ones that might benefit from Trump are ones you don’t want anyway.

    The Fed keeps raising interest rates to tame inflation, and every whisper of higher rates sends the market tumbling. But is Biden to blame for any of this? The answer is in part yes. First off, yes, market performance depends on a variety of factors, and the occupant of the Oval Office has little control over some of them. But don’t believe the administration’s reckless spending and belated response to the inflation crisis haven’t impacted the economy and the stock market.

    There’s no such thing as a free lunch, but Biden and the Democrats, in concert with some willing Republican accomplices, pretended like we could print money, send stimulus checks to millions of people (including plenty who didn’t need them), and expand unemployment programs with no consequences. Consider this nugget from a recent piece on the inflation blame game in the Wall Street Journal by Judy Shelton:

    According to a recent study prepared for the Fed’s Board of Governors by its own economists, the buildup of household income through government transfers during the pandemic subsequently fueled spending. “We estimate that U.S. households accumulated about $2.3 trillion in savings in 2020 and through the summer of 2021,” the study notes, citing “historic levels of government transfers” that included stimulus payments ($844 billion), unemployment insurance ($836 billion), and other transfer receipts ($548 billion).

    Without Joe Manchin to save them from themselves, the Democrats’ reckless spending would have been even more irresponsible. There’s also the fact that Biden (and the Fed) woke up to inflation too late, repeatedly minimizing the issue by claiming it was “transitory” and had “already peaked.” Inflation may have cooled to 7.1 percent in November, but I think the number is misleading and doubt the problem is anywhere near behind us.

    Biden backers will say the market was overvalued and thus due for a correction, but that’s only part of the story, and it obscures an important truth: not everyone was in on the action in the go-go Trump years. During the pandemic, a huge new class of inexperienced investors emerged who had never owned stocks before. Many did great in the beginning when everything with a ticker symbol went up. But the bottom has fallen out big time, and it’ll take years or decades for many new investors to recover from their losses. This group, along with parents who have kids about to enter college and those hoping to retire soon, have been hardest hit by the market swoon.

    Analysts think we’ll likely get a short-lived Christmas rally as investors sell losing stocks to harvest investment loss write-offs before year’s end. But many think 2023 will be a down year as well, and some think the next decade could be a bust.

    Anyone who’s fiscally responsible should understand how important the success of the stock market is, not just to the rich, but to a broad swath of the country. They should also be able to see just how bad it’s gotten under Biden. I’m not a financial advisor, but at least until 2024, I’d advise caution on the investing front. It’s possible we’re nearing a market bottom — but I bet we’re not there yet.