Why Donald Trump’s Wish for a Stock-Market Crash in 2024 is Unlikely
January 16, 2024 | by stockcoin.net
In this article, Mark Hulbert explores the likelihood of Donald Trump’s wish for a stock-market crash in 2024 becoming a reality. Despite expressing hopes that the market crashes if he is reelected and takes office, the article explains that the odds of a crash occurring this year are significantly below average. Using research conducted by Robin Greenwood, a Professor of Banking and Finance at Harvard Business School, the article outlines various factors that contribute to crash probabilities, including performance, volatility, IPO activity, and price path. The State Street US Froth Forecasts, which are derived from this research, indicate low crash probabilities for all sectors, suggesting that there are more pressing concerns to worry about in 2024.
Reasons why Donald Trump wants a stock-market crash in 2024
Desire to avoid being compared to Herbert Hoover
One of the reasons why Donald Trump may want a stock-market crash in 2024 is to avoid being compared to Herbert Hoover. Herbert Hoover was the President of the United States when the stock market crashed in 1929, leading to the Great Depression. Trump may fear that if the stock market crashes during his successor’s presidency, he will be seen as having failed to prevent a similar economic crisis.
Perceived benefits for his political agenda
Trump may also believe that a stock-market crash in 2024 could benefit his political agenda. A major economic downturn could create an environment of uncertainty and disillusionment among voters, which Trump could potentially exploit for his own gain. He may believe that a struggling economy and financial instability would make his promises of economic recovery and stability more appealing to voters.
Belief that a crash would discredit his successor
Another reason why Trump may want a stock-market crash in 2024 is the belief that such a crash would discredit his successor. By creating economic chaos and instability, Trump may hope to undermine the credibility and effectiveness of the next administration. This could potentially damage his successor’s ability to govern and achieve their policy goals.
Potential financial gains for Trump or his associates
There is also the possibility that Trump or his associates could benefit financially from a stock-market crash in 2024. During periods of market volatility and uncertainty, there are often opportunities for savvy investors to profit. Trump, who has a history of financial dealings, may see a crash as a chance to make lucrative investments or to capitalize on distressed assets.
Historical instances of stock-market crashes during presidential election years
The 1929 stock market crash during Herbert Hoover’s presidency
One of the most well-known stock-market crashes during a presidential election year occurred in 1929 during Herbert Hoover’s presidency. The crash, which marked the beginning of the Great Depression, had profound and lasting effects on the U.S. economy. Hoover’s inability to effectively address the economic crisis and prevent further damage to the stock market contributed to his reputation as an ineffective leader.
The 2008 market crash during George W. Bush’s presidency
Another notable stock-market crash during a presidential election year took place in 2008 during George W. Bush’s presidency. The crash, which was triggered by the subprime mortgage crisis and subsequent financial crisis, led to widespread economic hardship and a deep recession. The market crash and its aftermath were major factors in shaping public opinion and voters’ perception of the Bush administration’s handling of the economy.
The 2020 market crash during Donald Trump’s presidency
During Donald Trump’s presidency, the COVID-19 pandemic caused a significant stock-market crash in 2020. As the virus spread and lockdown measures were implemented, investor confidence plummeted, leading to a sharp decline in stock prices. The crash highlighted the vulnerability of the economy to external shocks and tested Trump’s ability to manage a major economic crisis during an election year.
Analysis of crash probabilities according to State Street US Froth Forecasts
Greenwood’s research on crash probabilities
State Street US Froth Forecasts rely on research conducted by Robin Greenwood, a Professor of Banking and Finance at Harvard Business School. Greenwood’s research focuses on identifying potential stock-market crashes based on various factors and indicators. The forecasts provide insights into the likelihood of a crash occurring and can help investors and policymakers make informed decisions.
Factors considered in crash probability models
Greenwood’s crash probability models consider several factors that can contribute to a stock-market crash. These factors include performance over a specific period, volatility, share turnover, IPO activity, and the price path of the market leading up to the crash. By analyzing these variables, Greenwood and his co-authors can assess the probability of a crash occurring in the near future.
Low crash probabilities for all sectors in 2024
According to the State Street US Froth Forecasts, the crash probabilities for all sectors of the stock market in 2024 are currently low. This suggests that the likelihood of a stock-market crash occurring in 2024 is significantly below average. While this does not guarantee that a crash won’t happen, it indicates that the current market conditions and indicators are not pointing towards a major downturn.
Comparison to average crash probabilities over the past five years
When comparing the crash probabilities in 2024 to the average crash probabilities over the past five years, the State Street US Froth Forecasts show that the current probabilities are well below the average. This further reinforces the notion that a stock-market crash in 2024 is unlikely based on historical patterns and the analysis of crash probabilities.
Factors that could contribute to a stock-market crash in 2024
Economic downturn or recession
One factor that could potentially contribute to a stock-market crash in 2024 is an economic downturn or recession. Economic indicators, such as GDP growth, employment rates, and consumer spending, can influence investor sentiment and market performance. If these indicators show signs of a significant slowdown or contraction, it could undermine investor confidence and trigger a market crash.
Geopolitical instability or conflict
Geopolitical events and conflicts can have a significant impact on the stock market. Political tensions, trade disputes, or even military conflicts can create uncertainty and volatility in global markets. If geopolitical instability escalates in 2024, it could lead to a loss of investor confidence and trigger a stock-market crash.
Changes in monetary policy or interest rates
Monetary policy decisions and changes in interest rates can also impact the stock market. Central banks, such as the Federal Reserve, have the power to adjust interest rates to control inflation and stimulate or stabilize the economy. If there are drastic or unexpected shifts in monetary policy or interest rates, it could disrupt market dynamics and potentially lead to a stock-market crash.
Market bubble or excessive speculation
Market bubbles occur when asset prices become significantly detached from their underlying fundamentals. Excessive speculation and investor irrationality can drive up prices to unsustainable levels, creating the potential for a market crash when the bubble eventually bursts. If there are indications of a market bubble forming in 2024, it could increase the likelihood of a stock-market crash.
Factors that make a stock-market crash in 2024 unlikely
Current low crash probabilities according to State Street US Froth Forecasts
As mentioned earlier, the State Street US Froth Forecasts indicate that the crash probabilities for all sectors of the stock market in 2024 are currently low. This suggests that the market conditions and indicators are not pointing towards a major downturn or a stock-market crash in the near future.
Positive economic indicators and market performance
The current positive economic indicators and market performance further support the idea that a stock-market crash in 2024 is unlikely. Factors such as GDP growth, low unemployment rates, and rising corporate profits can boost investor confidence and overall market stability. As long as these indicators remain favorable, the likelihood of a crash is diminished.
Stability in monetary policy and interest rates
The stability in monetary policy and interest rates can also contribute to a stable stock market. Central banks and policymakers play a crucial role in maintaining market confidence and stability through their actions and communication. If monetary policy remains consistent and interest rates are well-managed, it reduces the chances of a stock-market crash.
Efforts to regulate market activities and prevent excessive speculation
Regulatory measures and efforts to prevent excessive speculation can help mitigate the risk of a stock-market crash. Governments and regulatory bodies have implemented various measures to enhance market transparency, monitor market activities, and prevent excessive risk-taking. If these measures are effective and consistently enforced in 2024, they can contribute to a more stable market environment.
Impact of a stock-market crash on Trump’s political career
Potential damage to his reputation and legacy
If a stock-market crash were to occur in 2024 during or after Trump’s presidency, it could potentially damage his reputation and legacy. As the leader at the time of the crash, Trump may be held partially accountable for the economic downturn and its consequences. This could impact how he is perceived by the public and future generations.
Possible negative effects on public opinion and approval ratings
A stock-market crash can significantly affect public opinion and approval ratings for political leaders. The economic hardships and financial losses associated with a crash can lead to frustration, anger, and disillusionment among the general public. If Trump is associated with a stock-market crash in 2024, it could lead to a decline in his public support and approval ratings.
Implications for future political aspirations or influence
For Trump, a stock-market crash in 2024 could have implications for his future political aspirations or influence. A crash during or after his presidency may impact his ability to mobilize support or to position himself as a leader in future political endeavors. It could hinder his effectiveness as a political figure and limit his influence within the Republican Party or on the national stage.
Potential consequences of a stock-market crash in 2024
Financial losses for investors and individuals
One of the immediate consequences of a stock-market crash in 2024 would be financial losses for investors and individuals. As stock prices plummet, shareholders would experience a decrease in the value of their investments. This can have a significant impact on personal wealth, retirement savings, and investment portfolios.
Impact on retirement savings and pension funds
A stock-market crash can have a severe impact on retirement savings and pension funds. Many individuals rely on the performance of the stock market to fund their retirement plans. If the market crashes in 2024, it could potentially lead to substantial losses and jeopardize the future financial security of retirees.
Effects on job security and employment rates
A stock-market crash can also have indirect effects on job security and employment rates. As companies face financial difficulties and investors lose confidence, there may be a decrease in business spending and investment, leading to layoffs and job losses. This can contribute to higher unemployment rates and create uncertainty in the job market.
Ripple effects on other sectors of the economy
The consequences of a stock-market crash in 2024 would not be limited to the financial sector alone. A crash can have ripple effects that impact other sectors of the economy, such as manufacturing, retail, and real estate. As consumer confidence declines and spending decreases, businesses across various industries may face challenges and hardships.
Alternative scenarios for the stock market in 2024
Continued growth and stability in the stock market
One alternative scenario for the stock market in 2024 is the continued growth and stability of the market. Economic indicators and market performance may remain positive, leading to sustained investor confidence and market stability. This could result in a gradual increase in stock prices and a favorable investment environment.
Market corrections or minor declines without a full-blown crash
Another alternative scenario is the occurrence of market corrections or minor declines without a full-blown crash. Market corrections are normal and healthy market phenomena that allow for a reset and adjustment of stock prices. These corrections occur periodically as investors reassess market conditions, but they do not necessarily lead to a sustained or significant downturn.
Unexpected events or factors that could disrupt the market
There is always the possibility of unexpected events or factors that could disrupt the stock market in 2024. These events can range from natural disasters to geopolitical conflicts to technological disruptions. Such events can create volatility and uncertainty, potentially leading to market fluctuations or even a crash.
Advice for investors and individuals in light of potential market conditions in 2024
Diversify investments and portfolios
In light of potential market conditions in 2024, it is essential for investors and individuals to diversify their investments and portfolios. Diversification involves allocating investments across different asset classes, sectors, and geographic regions. This strategy can help mitigate losses during market downturns and balance risk exposure.
Stay informed about market trends and indicators
Staying informed about market trends and indicators is crucial for individuals navigating potential market conditions in 2024. Monitoring economic indicators, company performance, and geopolitical developments can provide valuable insights and help inform investment decisions. Being aware of market trends can also help investors identify potential opportunities or risks.
Maintain a long-term perspective and avoid making impulsive decisions
Maintaining a long-term perspective and avoiding impulsive decisions is vital during periods of market uncertainty. It is important for investors to focus on their long-term financial goals and investment strategies rather than reacting to short-term market fluctuations. Making impulsive decisions based on market volatility can lead to poor investment outcomes.
Consider seeking professional financial advice
In light of the potential market conditions in 2024, individuals may consider seeking professional financial advice. Financial advisors can provide personalized guidance and help investors develop strategies that align with their financial goals and risk tolerance. Professional advice can contribute to more informed investment decisions and help navigate potential market challenges.
In conclusion, while Donald Trump may have reasons to want a stock-market crash in 2024, the likelihood of such a crash occurring is currently low. Historical instances of stock-market crashes during presidential election years highlight the potential impact and consequences of a crash. However, analysis of crash probabilities according to State Street US Froth Forecasts suggests that the current market conditions and indicators do not point toward a major downturn or crash. Various factors and circumstances make a stock-market crash in 2024 unlikely, but investors and individuals are still advised to stay informed, diversify their investments, and seek professional advice to navigate potential market conditions.