President Trump once said, “the stock market does whatever the stock market wants to do.” Still, that didn’t stop him from claiming that his policies resulted in the ~75% growth in the S&P 500, following his election.
The ‘Trump Bump’ got a lot of attention, but it’s worth noting that we’ve seen a nice ‘Biden Bump’ in the year following his election, too. The S&P 500 is up +25% since the election in November 2020.
Most of the predictions I made in my Election Day 2020 post have largely come true: 1) Wall Street loves increased government spending; 2) inflation has become an issue; and, 3) very little that has happened in Washington DC has impacted me personally.
Related: Election 2020: Where Are We At?
I have to say that +25% stock market growth is a lot more than I would have expected in Year 2 of the global pandemic. The Schiller S&P 500 PE multiple, which I thought was too high pre-pandemic at 30x is now pushing 40x. That’s a worrisome number as we head toward 2022.
We are due to receive a big payout from a real estate loan soon and I’ll have to think about where it goes. I prefer it somewhere a lot less risky than the stock market right now. While I am happy to see the impact of the “Biden Bump” on our investment account balances, I’m feeling we are due for a big letdown, soon.
How are you thinking about the sustainability of the “Biden Bump” in stock market prices?
Image Credit: Associated Press