Our current president tweets a lot about how the stock market is doing exceptionally well, implying that it is his doing. I posted in past comparing the stock market return over recent presidential terms and it turns out President Trump’s term ranks 7th out of the last 10. Some of his supporters pointed to the huge stock market run up in the days after his election as evidence of the optimism leading into his term. Well now we have 25 days of stock market optimism leading out of his term and the market is up even more anticipating an incoming Biden presidency.
I don’t post or write this to imply that Trump is bad for the stock market and Biden is good. The real message is that the stock market goes up. And it has a lot more to do with the billions of things going on out in the real world than who is sitting in the oval office. So don’t believe it when a politician is trying to take credit or place blame based on short term movements of the market.
The way to build wealth is to ignore short term volatility of the market and trust that over long periods of time the market always goes up. The market has to because it’s the collection bucket of all of the profits, dividends, growth, revenues, and innovation that is constantly being pumped out by the global economy. That’s a ride you want to be on no matter who is tweeting what.
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.
p.s. Thanks to @prophetsea for sharing the idea for this post with me!