We’ve been here before. Stocks can fall fast and bounce back hard, even if they haven’t moved all that much or that quickly in recent years.
But perhaps you haven’t been here before. Maybe you just started investing in an individual retirement account or 401(k) at your first full-time job. Or perhaps you feared the stock market all through your 20s and 30s but finally got up the nerve to wade in 18 months ago.
The recent changes in the stock market have caused concern for some fledgling investors. To help ease anxiety, Business Day’s Ron Lieber answered viewer questions about current market fluctuations on Facebook Live.Back
“The stock market is shattering one record after another.” Presidents don’t usually brag about the stock market. “Just hitting a new high on the stock market again.” “The stock market is way up.” “The stock market is way up again today.” Well, they didn’t used to. That’s partly because if you take credit for the good times … “The stock market is up very, very big today.” … what do you do when markets plunge? Like when the Dow drops nearly 1,200 points. And what does a booming stock market actually mean, anyway? Is it something a president has any sway over? Well, first of all, let’s get one thing out of the way. Repeat after me: Stock market performance essentially tells us what investors think companies are worth on a given day based on what they expect corporate profits will be in the future. A big factor that drives markets is how confident or uncertain investors are about that future. Cutting taxes and rolling back regulations, as this president has done, do impact expectations by making investors optimistic about corporate profits. But that’s only one slice of information that gets baked into the stock market pie, which, in turn, is only one part of the national economy. And global markets had generally been barreling upward since March 2009. Even if a president could claim credit, a booming stock market doesn’t tell us the U.S. economy is necessarily growing. That’s G.D.P., which measures how much a country produces in a given period. Other indicators that help paint the economic picture include unemployment rates, construction spending and manufacturing outputs. And Trump often touts his success on those numbers too. But just as with stocks, claiming credit for the economy is complicated.
President Trump regularly takes credit for the stock market rising. Will he take the blame as it falls? And should he?CreditCredit…Tom Brenner/The New York Times