During the Clinton administration democrats lost majority in congress in the 1994 elections creating a divided government like we have now. As a consequence we had the last government shutdown that lasted from Dec 16 1995 to Jan 6 1996. During which the market produced outstanding returns; the S&P surged 26%. How is this possible? Simple, government paralysis means no government regulations. In other words, politicians can't ruin industry's stocks with regulations.
Now don't get me wrong, I don't have anything against some regulation, and the fact that the government can't decide on a budget and is shutting down as a result, isn't a good look for the country, and it's not good news for Americans. However when it comes to the market, I'm thrill about the idea of Washington shutting down. The stock market historically has gotten huge lifts from government shutdowns, and this is always good news for stockowners. Because of a shutdown the market has the chance of focusing on what truly matters, earnings.
No comments:
Post a Comment