Well, not really. They’re using it to describe the last four days of volatility.
The media is responding to events such as:
- Entering correction territory
- On 05-Feb-2018, the loss of 1175 points was the largest single-day loss (in points) since August 2011.
- On 08-Feb-2018, it followed with another big loss, of 1033 points.
They are ignoring:
- The stock market has done better on average under Trump than any other President in the last nine terms for their first year.
- Trump is averaging a 0.09% gain.
- Obama averaged a 0.05% gain.
- If you limit this to the S&P 500, Trump still is #2 of all Presidents in the last half-century, beaten only by Bush Sr.’s record.
So what’s the truth?
This is a chart of the Dow Jones Industrial Average, a proxy for the overall health of the stock market, for the last three years. (It doesn’t look much different beyond three years, but the drops wouldn’t have been displayed as single events with a longer time-frame.) There are other metrics, but this is the standard one.
What you should notice is that the media is both telling the truth… those drops were larger than under the last few (and all) years under Obama, and that they’re lying… Even with those drops, the market is still much higher than at any time under Obama.
- When investors learned that it would be Trump, not Hillary, they invested. The markets rose.
- Over the year since then, they invested and the markets rose.
- And then those tax cuts… and the markets jumped.
- And that “correction territory“? Didn’t even cost two weeks of gains. The market ended the down-turn still way above where it was a month earlier, and hugely above the best under Obama.
So was it a record-breaking drop? Yes, but mostly because there had been so many unsung record-breaking gains.