How do investors view presidents?

I often argue that presidents are responsible for about 3% of outcomes, and also that most people overrate the importance of presidents. (Perhaps this is a trait that evolved in pre-historic times, when tribal leaders were relatively more important.)

We don’t know the final outcome of the election, but the stock market seems to be reacting based on the most likely outcome, Biden plus a GOP senate. Why the big increase? Wasn’t Trump good for the stock market? Should Trump feel bad that investors seem to be celebrating his (likely) defeat?

I do think that a few of Trump’s initiatives helped stocks–mostly the corporate tax cuts. But of course the tax bill was mostly created by Congress; Trump merely signed the legislation. After that, Trump did little to help stocks, and his trade war reduced stock prices. The market knows this, and knows that McConnell will prevent a repeal of the corporate tax cut.

I think you could argue that both voters and investors are slightly more favorable toward the GOP than toward Trump. GOP Congressional candidates seem to be running 1.2% ahead of Trump, on average. That’s not a lot, but of course it’s a huge sample and thus “statistically significant”. And most people are basically party line voters.

Trump is such a polarizing figure that people (on both sides) have tended to think of politics in terms of Trump. But if you take a closer look it seems like voters and especially investors see things a bit differently. They wish to discard Trump’s trade/immigration policies, but not his conservative economics.

The stock market soared under Obama. I don’t think many conservatives attribute that to Obama, nor do I. Stocks also soared under Trump. But why not call the 2017-20 stock rally the “Mitch McConnell rally”. That may not be accurate either (perhaps he deserves 3% credit), but it’s no worse than calling it a “Trump rally”.

PS. If you say stocks are not rallying on Trump’s defeat, rather it’s the gridlock in Congress, I agree. That’s my point; Trump himself is not all that important.

PPS. Is this the first election where both sides seem disappointed? Trumpistas love Trump more than his policies, and Dems like Biden’s policies more than Biden. Trumpistas are (likely) losing Trump, and Dems are losing their chance at enacting their policies.

Only investors seem happy. Cold, inhuman, robotic investors, with no heart, no human feelings.

Neoliberalism is like a monster that cannot be destroyed.

PPPS. I just saw that Nevada seems to be going for Biden. According to Fox News and AP that means Biden has won. But I’m still not convinced on Arizona; indeed I’ve never believed that call. On the other hand, he seems to have a good chance in PA and GA. So he’s got three paths.

But what if Trump somehow won? How would stocks react?



40 Responses to “How do investors view presidents?”

  1. Gravatar of xu xu
    5. November 2020 at 09:58


    Investors are happy about a Trump victory, which they know is going to happen after LEGAL votes are counted. They now have proof of voter fraud in Michigan, so that state will be challenged. And PA has many discrepancies including marketing fraud at the polling stations. Lawsuit already successful at appeals court in PA. After it gets to Supreme Court (either state or National depending on verdict) there will definitely be a recount. And that recount will involve certifying all ballots. Since DEMS forged many of them, that will increase DJT votes.

    4-6 weeks of legal challenges, but this blatant attempt to steal the election and force authoritarian globalism on people (Great Reset) has been thwarted by the American public – all of that despite MASSIVE propaganda.

    Might even end in Civil War, which I think is good for American patriots. They need to reclaim their country from the communist global agenda.

  2. Gravatar of anon/portly anon/portly
    5. November 2020 at 10:16

    “PPPS. I just saw that Nevada seems to be going for Biden. According to Fox News and AP that means Biden has won. But I’m still not convinced on Arizona; indeed I’ve never believed that call. On the other hand, he seems to have a good chance in PA and GA. So he’s got three paths.”

    At, Biden’s still only at 86.4, Trump at 13.0.

    Trump doesn’t seem to have his heart into it right now, at least if you look at his recent tweets. Maybe that is a strategy to drive down his odds, so he can buy himself more cheaply.

  3. Gravatar of ssumner ssumner
    5. November 2020 at 10:21

    Anon, But they had Wisconsin at only 93%, whereas it’s actually 99%. The market seems behind the curve, perhaps because of high transactions costs and little interest in bets with small gain opportunity. Based on what I’ve read, the odds for Biden are now much higher than 86%, Nevada’s basically 100%. PA is clearly trending toward Biden, so is GA. And yet the overall odds are little different from the PA odds. That makes no sense, given that the three states are now basically independent events.

  4. Gravatar of anon/portly anon/portly
    5. November 2020 at 10:22

    Re the idea of the betting markets “seeing” the election more clearly than the polls.

    I don’t really understand this idea, to be honest. It’s probably over my head. What do the participants in the market actually observe?

    I wonder if what they observe could be simply polling bias? So that election markets are really polling bias markets? Or is that just nutty?

  5. Gravatar of ssumner ssumner
    5. November 2020 at 10:25

    I suspect that insiders already know that Biden’s won. Yesterday on TV a newsman said a Biden person he talked to said Biden would win GA by about 7500 votes, at a time Biden was behind by 50,000. I wondered how he could know that, but the gap is down to 13,000 and if current trends continue Biden will win GA by a few thousand.

  6. Gravatar of ssumner ssumner
    5. November 2020 at 10:33

    Anon, I’m saying the median bettor has an estimate of polling bias (say 4%) that is roughly correct.

  7. Gravatar of Tom Tom
    5. November 2020 at 10:46

    The indestructibility of neoliberalism reminds me of Scott Alexander’s post on unstoppable march of the universal culture

    I hope he starts writing again sometime soon.

  8. Gravatar of ssumner ssumner
    5. November 2020 at 10:58

    Anon, I just saw some figures that Biden will win PA easily, and will likely win GA and AZ as well.

    It’s over.

  9. Gravatar of ssumner ssumner
    5. November 2020 at 10:58

    Tom, Yeah, he was great.

  10. Gravatar of harry harry
    5. November 2020 at 11:20

    In no situation will Biden win.
    A voter in Nevada went to cast her ballot for Trump, and the voter was told her ballot was already cast for Joe Biden. The scale of fraud here is massive. And not just in Nevada. There is now video proof in Michigan. Video proof in PA. Some minor discrepancies in Wisconsin that probably won’t be overturned, because there is not enough evidence, YET, but I imagine evidence may come forward soon.

    What I find remarkable is how the MSM is trying to propagandize this as “Trump doesn’t want to count votes” when it’s been clear that he does want ALL votes to be counted, but like everyone else he wants LEGAL votes to be counted. Legal means the person actually voted, and signed it. It wasn’t ballots sent to a mailbox, picked up by an operative, and signed by the operative. And for those that say it doesn’t happen: just google. People have been prosecuted for that already.

    If the democrats refuse to acknowledge the corruption, then the supreme courts hands will be forced. But either way, Trump victory is coming. And if democrats refuse court order, which they have now tried to do in PA, despite the trump team receiving an order from appeals court, the militias and military will begin to take action. I love how democrats ask military to remove Trump, when 17 of the 22M veterans in this country are conservative. NOT GOING TO HAPPEN! The corruption in these democratic cities is appalling! But nobody should be surprised. That is exactly what happens when you vote for the same people over and over. They begin to make relationships, and leverage those relationships to hold power.

  11. Gravatar of Spencer B Hall Spencer B Hall
    5. November 2020 at 11:20

    re: “but the stock market seems to be reacting based on the most likely outcome”

    An after the fact comment. Almost all market movements are preordained. They are irrespective of the current news. I already predicted the spike in Nov. The economy is about to abort without additional stimulus.

    Intelligence is the ability to filter – not the ability to regurgitate.

  12. Gravatar of janice janice
    5. November 2020 at 11:32

    So get this:
    Trump files suit so that his team can watch the counting of the ballots in PA.

    Judge grants the order, allowing trump poll watchers within 6 feet to witness the counting of ballots.

    Dems refuse to acknowledge court order, and countersued to state supreme court. They will of course lose in the state supreme court, but while the doors are locked and barricaded, they can continue the shenanigan’s.

    Obvious fraud taking place. If there wasn’t, they wouldn’t care about people watching the vote count. Pretty harmless to stand their and watch. lol.

    I love this, because in the end Trump will win. And it shows to the whole world how corrupt the DNC is. Australians are already chatting about the corrupt biden family. huge parade in nigeria to show love for Donald Trump.

    We are watching the end of the democratic party, and gosh nothing could be more beautiful. Beer and popcorn anyone?

  13. Gravatar of Garrett Garrett
    5. November 2020 at 12:25

    Facebook is up over 10% from Monday’s close. The house committee recommended that big tech be broken up since it’s a monopoly. A blue wave might’ve made that a reality.

    Seems like FB was trading at a 10% break-up discount

  14. Gravatar of sty.silver sty.silver
    5. November 2020 at 12:31

    I’m just going to ignore the post and say something related to the race and the comments (sorry).

    I was thinking recently that maybe the presidential market is uniquely poorly calibrated (ofc, you might disagree with the premise) because a lot of the money on Trump is not coming from smart gamblers who have rational reasons to believe the polls are wrong, but rather, it’s from people who have been brainwashed by Trump into believing that polls don’t matter. I’ve talked such a person just a few days ago — they truly believed that Trump had a 99% chance of winning. They believed it enough to bet a ton of money on PredictIt. They thought 40ct was a good price.

    And various people in your comments make me feel something similar. Under this view, it’s a phenomenon of increased polarization and the diversity of media, and maybe prediction markets becoming a bit more widely known.

    The best counter-argument I see is that it would seem to predict that PredictIt has worse odds than other betting markets, especially crypto markets where signing up is difficult (afaik, the gap was fairly small). Unless there are also tech-savy people affected (who believe polls don’t matter? doubtbful.) or smart gamblers have made sure the markets stay close. The last one seems plausible.

  15. Gravatar of Tara Tara
    5. November 2020 at 12:41

    Democrats really miscalculated this election.

    1. Choosing Biden was a poor decision.
    2. Rigging the election in broad daylight will now ruin the integrity of our elections for years and years.

    Proof of election fraud in Minnesota is now on Video. The Victims were allegedly elderly. Omar’s rep picked up ballots for these elderly people, and told them he would “fill them out and sign himself”.

    Sean Parnell, a former soldier, is now refusing to concede in PA after allegations of fraud in his district.

    Two things can happen:

    1. All votes are recounted and VERIFIED.
    2. Civil war.

    Because Trump is not going to step down with this much fraud. And quite frankly, he shouldn’t. It’s not in the best interest of the American people. We must ensure integrity first.

  16. Gravatar of bill bill
    5. November 2020 at 12:44

    I’ve been so focused on the election, I haven’t even checked the stock market. The biggest surprise, election-wise, today was the big increase in the possibility of a Dem Senate now that there may possibly be two Georgia run off elections.

  17. Gravatar of Michael Rulle Michael Rulle
    5. November 2020 at 12:57

    I agree there is virtually a zero chance of a recount (except maybe a 10% chance in Wisconsin if there is one) changing the election. Re: Trump and stock market–I do like your Senate hypothesis—assuming they get the 51-52 number Rove thinks. But………….

    The GOP has controlled the Senate for about 10 years—and when Hillary was seen as a loser election night the total return of the s&P was up 40% with no negative months over the next 16 months, starting that night–versus 4.3% for prior 16 months.

    yes coincidences happen, but that started as soon as they knew Trump was the winner. This time investors feared the crazies would have total control and momentum to reverse taxes, drilling etc. Assuming Rove is right they cannot, except we will see more “exective actions”

  18. Gravatar of Christian List Christian List
    5. November 2020 at 12:59

    I wondered how he could know that, but the gap is down to 13,000 and if current trends continue Biden will win GA by a few thousand.


    They know the number of votes not yet counted, they know which areas they come from, they know the voting behavior of previous years, they know the polls, and then they calculate it. But they should not tell the numbers beforehand, that only fuels conspiracy theories.

    There are enough Biden followers who have predicted a blue wave, which will come at any moment now, just wait and see.

    Anyway, both groups are important for forming the correct market opinion, that’s precisely the whole point of the matter.

  19. Gravatar of rinat rinat
    5. November 2020 at 13:09

    For those submissive left people who go along for the ride thinking you can escape the mob. Look at this:

    That’s what happens when you try to appease a mob. They will come for you next. Its marxist way of doing things.

  20. Gravatar of bill bill
    5. November 2020 at 13:11

    Adding to Christian’s description. They now can say that as of X o’clock on Tuesday or Wednesday, they had X thousand votes with particular characteristics (most important one being Fulton County mail in ballots) and each time they counted say 5,000 of them, it went 70/30 for Biden. Balls in an urn type analysis.

  21. Gravatar of foosion foosion
    5. November 2020 at 13:11

    @harry, this Nevada situation? “Clark County just addressed this on-record, said they investigated, spoke to the voter, found the signature to be valid, gave her an opportunity to sign a statement challenging the ballot and signature, and she declined.”

  22. Gravatar of Michael Rulle Michael Rulle
    5. November 2020 at 13:13


    Perdue already got more votes than the other two, almost 50%—not sure why any of them would switch in a runoff–but it will be close. Warnock Loeffler will be by far the most expensive race in history—maybe together they both get to 1 billion

  23. Gravatar of Michael Rulle Michael Rulle
    5. November 2020 at 13:20

    Mr. Xu is very funny on several levels

  24. Gravatar of Alex Mazur Alex Mazur
    5. November 2020 at 13:33

    Alternatively: markets priced in significant chance of Democrats winning everything and now are just adjusting. So they are celebrating in a way GOP performance relative to their expectations.

  25. Gravatar of Michael Rulle Michael Rulle
    5. November 2020 at 13:47

    Trump had highest minority vote for GOP for since 1960

    Trump will lose leads in 3 states when the last 5% of votes were counted, thus losing the election.

    So far, Trump has a higher percent of the vote than Clinton did in 2016

    GOP may gain 12 seats in House

    Subtract California, Texas and Mississippi (biggest Dem state, biggest GOP state, plus another GOP state to get votes equal) and Trump and Biden are equal in total votes

    One would have thought Trump would have won —-but losing during the mail in counts is got him

    I wonder who is running in 24? Harris? versus who? have no idea.

  26. Gravatar of Mark Mark
    5. November 2020 at 14:00

    I was very happy to see these election results, for the reasons in this analysis. Biden gets to handle executive stuff like trade, immigration, and just the competent functioning of the government in general, while Congress blocks any far-left legislation or even appointees. Even better, the clear evidence that whites moved to Democrats and non-whites moved to Republicans should reduce racial polarization, which will reduce the incentive for wokeness on the left and traditional forms of racism on the right.

    I agree with sty.silver that there is clear evidence of people in prediction markets betting on their candidate to cheerlead rather than making a rational bet. Exhibit A is that the price for Biden or Trump to win the election was consistently about 5 cents higher than the price for their opponent to lose their election. A rational investor would never pay a higher price for a candidate to win this election than for the other candidate to lose. But if you wanted to show support for your candidate, you might. Exhibit B is that some of the prices of some of the markets on PredictIt that had brackets followed a two-hump distribution. The day before the election, the GOP winning the popular vote by 0-1.5% was at 9 cents, and the Democrats to win the popular vote by 6-7.5% was at 13 cents. But the middle brackets were actually cheaper: Democrats to win the popular vote by 3-4.5% was only at 7 cents! (It looks like the correct answer will be Democrats 4.5%-6%, which is below the median hump of the left bell curve but certainly much closer to that hump than the median hump of the right bell curve). If investors were rational, the most expensive bracket should have been one of the middle values, with more extreme values becoming successively cheaper. The fact that the middle values in this market were actually cheaper than values further out suggests to me that investors are in two epistomological bubbles that are more powerful than rationality: a larger and somewhat out-of-touch center-left bubble, and a smaller but much more delusional right-wing one.

  27. Gravatar of janice janice
    5. November 2020 at 14:05

    Its so so beautiful to watch the democratic party burn to the ground.

    140K votes casted for Biden in Georgia with no down ballot voting between the hours of 4am and 6am 🙂

    Michigan, Arizona, Georgia, North Carolina and Pennsylvania amazingly have reported these same discrepancies. USPS postal worker is now on video in Michigan saying he will take ballots from mailboxes and sign them for Biden.

    My theory as to why polls were so wrong again: the media thought trump would receive about 60M votes, and they new that Biden had created an operation that would net him about 65-70M, hence the 7-10 point difference. When Trump began to receive record turnout in rural areas, they quickly stopped the count realizing he would net about 70M. The ballot stuffing was done to boost Biden. Now the entire house of cards is coming down.

    This is the end of the DNC. We are witnessing the beautiful death of the democratic party.

    Conservatives may also pick up the house. 18 seats remaining. they are leading in 9. just have to pickup 3 more and win the ones they lead and corrupt pelosi is finally gone! Is there anything uglier than her face? Long shot. but possible.

    Senate will hold. And Trump will be reelected.

  28. Gravatar of bill bill
    5. November 2020 at 15:04

    I see that the DAX is up 2% too. Would the value of DAX components be impacted differently by Biden with a D vs R Senate?

  29. Gravatar of msgkings msgkings
    5. November 2020 at 15:19

    @Michael R:

    It will definitely be Harris for the Dems in 2024, and the Reps if they are smart will nominate Nikki Haley and cancel the “girl power” vibe the Dems would be pushing.

  30. Gravatar of Benjamin Cole Benjamin Cole
    5. November 2020 at 16:06

    As LBJ said down in Texas, “It’s not who votes, but who votes last.”

    Some things have changed however: the Democratic Party now appears to represent Wall Street, Silicon Valley, Hollywood, major media, academia, and PC.

    Who would befoul themselves by voting for such a party? But then, the option was Trump.

    Good luck everybody.

    PS I would not want to be a newsman or a publisher in Hong Kong anymore.

  31. Gravatar of Benjamin Cole Benjamin Cole
    5. November 2020 at 16:08

    Add on: I should have said the Democratic Party supports PC, implemented by ukase.

  32. Gravatar of Benjamin Cole Benjamin Cole
    5. November 2020 at 16:19

    While I still have my job, many events and organizations tell me that they can’t afford to publicly invite, fund, or associate with me because of what mobs say about me. They say they don’t personally have a problem with anything I’ve said or done, but they don’t want the hassle that mobs could impose.—Robin Hanson.

    Good luck everybody.

  33. Gravatar of ssumner ssumner
    5. November 2020 at 16:29

    Christian and Bill, Yes, that seems right. It’s interesting that the media seems reluctant to give the public the “best information”. Until I delved into twitter and 538, I thought the race was still in a lot of doubt. It seems 99% over now.

    Bill, Don’t know about the DAX, but it’s sort of a China play.

    Michael, You said:

    “So far, Trump has a higher percent of the vote than Clinton did in 2016”

    Misleading. The gap will get much wider. Hillary lost by 2.9 million, Trump will eventually lose by 7 million after the CA and NY votes are all counted.

    Mark, There are very high transactions costs which make the market less than perfect, but during October the implied point estimate of the vote margin was pretty close to being correct.

  34. Gravatar of mary mary
    5. November 2020 at 17:19

    If there are circumstantial allegations of fraud, based on videos and photos, which is the now the case in several states, then there will increasing pressure for state legislatures to step in. Article II of the constitution gives the state legislature the power to determine the electors. And WIS, MI, Arizona, Georgia and PA legislatures are controlled by state republicans.

    Courts can make electoral vote process decisions, but the electors are chosen by the state legislature. Despite the media painting a “gentlemen’s narrative” around the Al Gore concession in 2000, he actually conceded because the state legislature was not going to award him the votes.

  35. Gravatar of William H. Rogers William H. Rogers
    5. November 2020 at 19:12

    “Neoliberalism is like a monster that cannot be destroyed.”

    That’s going on my next coffee cup.

  36. Gravatar of mbka mbka
    5. November 2020 at 20:49


    ” Is this the first election where both sides seem disappointed? Trumpistas love Trump more than his policies, and Dems like Biden’s policies more than Biden. Trumpistas are (likely) losing Trump, and Dems are losing their chance at enacting their policies.”

    Proof that democracy in America works just as the founding fathers intended. They distrusted any government, including a democratically elected one, so they made sure that no particular faction of “the people” (an illusory and impossible aggregate) could actually rule.

    Ideally this leads to a libertarian society where everyone just does what s/he pleases and transactions are left to the market. In practice this sometimes leads to gridlock in important areas where public policy is actually necessary.

  37. Gravatar of ssumner ssumner
    5. November 2020 at 21:56

    Mary, Not to be impolite, but I think you are commenting in the wrong blog. This is not a conspiracy blog.

  38. Gravatar of Mark Z Mark Z
    6. November 2020 at 09:05

    I agree, msgkings, that Harris will run, and that the GOP should nominate Haley. I mean I’d prefer Thomas Massie or Mike Lee, but among realistic options Haley is the best option. It be nice if Hawley and Cotton split the populist vote for her.

    OT: latest jobs report puts unemployment down to 6.9%; Lars Christensen was pretty close to getting it right. Maybe only a month off.

  39. Gravatar of John C Stalnaker John C Stalnaker
    7. November 2020 at 11:24

    Scott, your comment on “heartless investors” matched my response perfectly. Here’s a complete copy of my Thursday morning email to a friend.

    On the elections: 😃 😊 😆!!! Goodbye Donald (probably), Republican Senate, gains in House, good on state governors and legislatures, pollsters incompetent again, slap upside the head to Democrats. What’s not to like? Maybe politics will become boring again! Despite being pleased to see Trump go down, I was also pleased to see him increase his black and Hispanic count. What surprising numbers! That the identity/intersectional focus is an electoral loser is such good news, not that the Democratic left will do anything other than double down on it, at least for a while.

    PS My beloved left-learning daughters were not so happy. 😢

  40. Gravatar of ssumner ssumner
    7. November 2020 at 11:33

    John, I’m glad to see anything that moves us away from identity politics, even if it’s Hispanics voting for Trump.

    I’m against both white and non-white identity politics.

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