Social Events – Part FOUR

Does Social Mood Influence Accusations of Presidential Ineligibility?

The socionomic model has often noted the dramatic effect social mood
has on the public’s attitude toward sitting leaders. For example,
the November 1999 Elliott
Wave Theorist
featured a short story on elections in a report
titled “Socionomics
In a Nutshell
.” It showed that rising public mood tends to
lead to presidential reelections while falling public mood leads to
oustings. Robert Prechter, Peter Kendall and others have proposed
other aspects of the mood/election relationship, such as the observation
that rising mood favors traditional candidates while falling mood
tends to smile upon perceived agents of change.

The charges that Obama was born outside the United States and therefore
is ineligible to hold the presidency fit right in. The same charge
was leveled at the Republican presidential candidate during the same
election: John McCain was born in the Panama Canal Zone when his father
served there as a Navy officer. The public always looks for justification
to support its feelings; during extreme mood phases, voters embrace
increasingly farfetched rationales.

Figure 1

Barack Obama’s presidency has so far endured two major social mood
phases: the strong bear phase that he inherited and a powerful bull
phase (see Figure 1). The “Birther” charges dogged him during
his candidacy and early presidency, as stocks plunged. But during
the subsequent two-year rally, those same charges faded–and then
melted away.

It turns out that Obama is not the first sitting president to face
charges of ineligibility. James Fallows of The Atlantic noted that
such an expression has happened once before: to President Hoover,
another big-bear-market president (see Figure 2). In 1931, John Hamill
released his book, The Strange Career of Mr. Hoover Under Two
Flags
. Among other accusations, Hamill asserted that Hoover had
given up his U.S. citizenship as early as 1900 in order to gain an
edge in an overseas business deal.

Figure 2

Hoover’s eligibility question did not get legs, despite the continued
plunge in public mood. But mood did do a number on Hoover’s reelection
bid (and legacy). First, he was the people’s overwhelming choice for
president: He entered the office with a 58% landslide victory in the
popular vote as the Roaring Twenties came to a head. Then he was tossed
from office just four years later in a near-mirror-image landslide
defeat of 57%. The reason for this emphatic dismissal? Social mood
had plunged, as displayed by the Dow, which had shed 89% of its value.

Having dodged the Birther charges, presumably for good, the question
now is how President Obama will fare from here. What are his chances
for reelection? The direction of public mood, as reflected by the
stock market, will set the odds.

Do you want to know who will win in November? Ask
The Stock Market.

Read the landmark academic paper by Prechter, Goel, Parker
and Lampert that identifies the link between stock market performance
and presidential election winners. Read
it for yourself, courtesy of SSRN, by following this link and clicking
“One-Click Download” at the top of the page.>>

the years of Presidential elections and study the action of

the market and the formation of it on the chart in the early

part of the year and again just previous to the election and

following it. In most cases you will find that the event,

whether considered good or bad, was discounted beforehand.

There is seldom ever a presidential year but what at

some time there is a scare and severe decline. Public sentiment

gets mixed. They decide the Democrats are going to

win and the market starts in to discount it. However, it

makes no difference whether there is a Democratic president

or a Republican. If stocks have been distributed and are in

the hands of the public, they will go down during a Republican

administration. We have had just as many panics when

a Republican president occupied the White House, as have

occurred when the Democrats were in power. It all depends

upon at what level prices are, and the condition of affairs

throughout the country. This will be plainly registered by

the tape and your chart will show it. If not, wait until you

get a clear indication.

An extreme decline occurred in July and August, 1896,

which was known as the “Silver Panic.” The whole country

got scared and decided that Wm. J. Bryan was going to be

elected and that his silver dream would become a reality.

Investors and traders sold stocks regardless of value and on

August 8th, the average prices of industrial and railroad

stocks reached a level which was the lowest from that day

until the date of this writing.

In 1912, when Wilson was elected for the first time, the

stock market advanced in September and October previous

to the election, because the Republicans were convinced that

the Democrats would not win. Therefore, they did not

create any scare to start the public selling stocks. Of course,

after Wilson was elected, which really was an unexpected

event to investors who believed and feared that the “d—–

Democrats” would ruin the country, they then began to sell

stocks and discount the Democratic administration. The war

followed in 1914 and completed the liquidation and made

it even worse than it would have been. But this decline in

stocks would have taken place even though a Republican had

been in power, for the good and sufficient reason that prices

were high, and that stocks had passed from strong hands

into weak, and the general condition of the country was not

such as to warrant the existing level of values at the time of

the election.

Even back in 1923 – 1 great trader had worked out the link that events don’t move the market in 99% of cases the market moves prior to events happening – I have to stress that the methods of Elliott Wave and W.D. Gann are unrelated, yet they can both make associations with certain phases of stock market action and events – there has to be some link and driver to these conditions and socionomics makes a blooming good case.  Although I don’t subscribe to the Elliott Wave count on charts I do subscribe to Gann Cycle theory and believe that they can be used to pinpoint turning points.

The key is linking events to market cycles – yes it all looks great in hindsight but if you can identify events as they’re unfolding and think about the type of market cycle those events usually occur in you could start to piece things together.

I keep saying fully understanding the markets tales time and effort – one of the reasons it’s so hard and time-consuming is that most research aspects are found via the mainstream media – the mainstream media does not contain the real answers, so the wild goose chase continues down various avenues!

Enjoy

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