The Performance of Job and Stock Markets Through 48 Years and 8 Presidencies

Here is data for the last 48 years on labor and capital markets.

The stock market performance (orange line) represents the average annual return of the three major indices (Dow, NASDAQ, and S&P 500). The timeframe runs from the day after each presidential election to the day the next president is declared the winner.

The job number reflects the average monthly employment figure reported by the Bureau of Labor Statistics (BLS) during each president's full term, from their first to last complete month in office.
There are many factors outside a president's control—and many within it. For instance, the Great Recession that tanked George W. Bush’s economic numbers was largely a consequence of policies championed during his presidency. Bush’s administration embraced financial deregulation, undoing safeguards put in place after the Great Depression. These included the repeal of the Glass-Steagall Act and looser oversight of financial derivatives. The ensuing financial crisis was not mere coincidence but evidence that, as in sports, financial markets thrive best when they strike a balance between free competition and effective regulation. Bush’s poor stock market and job performance stemmed from these flawed policies.

Luck matters too. For example, Donald Trump faced the worst pandemic in a century, which disrupted the economy and labor markets worldwide. However, governance also plays a role. Trump refused to coordinate a national COVID-19 response, leaving states to act independently. In his final month in office, his focus was not on the pandemic but on contesting the results of the 2020 election, culminating in a riot at the Capitol. Meanwhile, COVID-19 deaths reached staggering levels, averaging 3,000 deaths per day—equivalent to a 9/11 attack every 24 hours.

Joe Biden inherited these challenges but immediately launched a coordinated national COVID-19 response. His administration passed a sweeping recovery bill to support job creation and stabilize the economy. This proactive approach likely prevented the sharp contraction or sluggish recovery that could have occurred under a laissez-faire approach, akin to the post-Great Recession recovery during Obama’s presidency. At that time, Congress pressured Obama into austerity measures that prioritized deficit reduction over aggressive job creation, resulting in years of depressed employment growth.

The takeaway? Demographics, pandemics, and policy all play roles in shaping labor and capital markets. Like in bull riding, the difficulty of the circumstances ("the bull") matters as much as the skill of the president ("the rider"). Strong governance can make all the difference between a sharp fall and a smooth landing.

The 14th Amendment As an Obstacle to Trump's Policies

Today Trump stated that he was going to end birthright citizenship - something granted by the 14th amendment.

The 14th Amendment was created after Republicans recognized that Southern Democrats were freeing slaves but denying them citizenship based on race. This amendment redefined citizenship, making it about more than bloodlines or tribal affiliations—it became a shared commitment to ideals and opportunities. It stands as one of the most fascinating experiments in the broader sweep of American innovation, defining the nation as something profoundly different from what had come before. Here was identity rooted in shared ideals, not shared ancestry—a nation striving for equal opportunity, despite its diverse histories and conditions.

The 13th Amendment ended slavery. The 14th Amendment completed the transformation by granting citizenship, guaranteeing it through the simple fact of being born in this country. To ignore the 14th Amendment and deny citizenship to those born here is to abandon the principle that defines America. It reduces citizenship to ancestry rather than potential, binding people to their parents’ past rather than opening the door to their own future.

Unsurprisingly, Trump and the MAGA boys who are fascinated by race, heritage and genes find the 14th amendment an obstacle to his policy. We fought a civil war to put up that obstacle. He thinks he can remove it with an executive order.

The Invention of Psychology Predated the Invention of Macroeconomics

What I can tell you: Sell your stock at the market’s peak and buy when it hits bottom.
What I can’t tell you: When the market is at its peak or when it’s hit bottom.

Finance and economics exist at the intersection of hard facts and human behavior—the interplay between mathematical calculations and animal spirits. In retrospect, it seemed inevitable that William James and Sigmund Freud would invent modern psychology before John Maynard Keynes invented macroeconomics. Human psychology is as influential as industrial capital in shaping economies and markets, driven in part by the power of mood and in part by analysts making precise calculations with inherently speculative numbers.

A Long Walk and a Moonwalk - Armstrong and Aldrin's & Lewis and Clark's Journey's To Define America

Neil Armstrong and Buzz Aldrin (A&A) traveled to the Moon in 1969.
Lewis and Clark (L&C) explored the American frontier, reaching Oregon and returning, from 1804 to 1806.
Here are some intriguing comparisons between their historic journeys.
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Top Speed:
• L&C: ~3 mph (on foot, horseback, and by boat).
• A&A: ~25,000 mph (during re-entry to Earth's atmosphere).

Total Distance Traveled:
• L&C: ~8,000 miles (round trip).
• A&A: ~478,000 miles (round trip).

Support Crew:
• L&C: 33 members in the Corps of Discovery.
• A&A: Over 400,000 NASA employees and contractors supported the mission.

Length of the Journey:
• L&C: 2 years, 4 months, and 8 days.
• A&A: 8 days.

Communication
• L&C were out of contact with Washington, D.C., for their entire journey (~2.5 years).
• A&A maintained near-continuous communication with NASA Mission Control, with brief blackouts during lunar orbit.

Languages Encountered:
• L&C: In addition to English and French, they encountered ~50 Native American tribes, each with their own language or dialect.
• A&A: In addition to English, they navigated the specialized "dialects" of engineering, computer science, and flight operations.

Legacy:
• L&C: Lewis & Clark’s expedition led to westward expansion and the transformation and settlement of the American frontier, changing the lives of millions of Americans who have turned a former frontier into home.
• A&A: Armstrong and Aldrin’s mission pioneered a different kind of frontier—one settled not by homesteaders but by computer scientists, entrepreneurs, communication satellites, and new technologies. Their journey was a catalyst for the creation of new industries, companies, wealth, products, and technologies, transforming the lives of people around the globe. Like the Apollo team, people today communicate almost instantly across vast distances, connecting through spaces as immense as the surface of the Earth that was first seen as a whole on a NASA mission and now is increasingly treated as one globe in daily communication, trade, development and finance.

William Browder on Russia's Curious Lose-Lose Tendencies

William Browder ran the largest investment fund in Russia until Vladimir Putin effectively drove him out of the country. Ironically, Browder's grandfather had run against FDR as the Communist Party candidate. As a teenager, Browder rebelled against his family’s history by embracing capitalism. The symmetry appealed to him: just as his grandfather became a communist in capitalist America, Browder would become a capitalist in communist Russia.

By the early 2000s, he was managing the biggest investment firm in Russia, achieving years of extraordinary returns. But he describes Russian culture as deeply rooted in a peculiar form of lose-lose thinking. He cites a popular Russian folktale that illustrates this mindset: A man discovers a genie who grants him one wish, with the caveat that whatever he wishes for himself, his neighbor will receive double. Immediately the man says, “Poke out one of my eyes.”

Biden's Very Wise Choice to Pardon His Son

Trump has made it clear that he intends to use the presidency as a tool for revenge.

Mitt Romney, a former Republican nominee for president, has reported spending thousands of dollars per day on protection for his family after publicly criticizing Trump. Trump has also made shocking, violent comments about Liz Cheney, once one of the most powerful Republicans, whom he despises for having the courage to stand against him.

Trump and his MAGA allies have already targeted Hunter Biden with a relentless barrage of accusations, many of which have been debunked or exaggerated. Let’s not forget that Trump pressured Ukrainian President Volodymyr Zelensky to falsely implicate Hunter Biden in Ukrainian politics, threatening to withhold congressionally approved military aid if Zelensky did not comply. This was a key element of Trump’s first impeachment.

Given Trump’s vindictive nature, it’s almost certain that he would weaponize the presidency to make Hunter Biden’s life as difficult as possible, turning his son into a proxy for his ongoing grudge against President Biden.

President Biden, a man who has endured profound personal tragedy—the loss of his first wife and daughter in a car accident and his son Beau to cancer—is someone who deeply loves his family and his country. Pardoning his son to spare him from relentless harassment and potential imprisonment by the world’s most powerful man is a decision I can understand.

Perhaps Trump supporters might struggle to see it this way, but as a father who loves my son, I can relate. Moreover, I believe it’s profoundly un-American to use the highest office in the land to settle personal scores. Biden’s choice resonates with me because it reflects values that stand in stark contrast to vindictiveness and abuse of power.

Once Upon a Time ... They Set Aside Some Time for When There Was No Time

Once upon a time, December was the 10th month, and the Roman calendar from January through December covered about 300 days. That left roughly 60 days off the calendar—a stretch of time with no farming schedules, no religious obligations, and not even named months to worry about.
Imagine it: two whole months without tracking months, let alone days. 

Not just free time, but free of time.

Am I the only one who finds that idea incredibly appealing?

Post-WWII Germany: A Four-Zone Experiment in Governance

After World War II, Germany became a real-world experiment in governance, divided into four zones administered by the USSR, France, the UK, and the US. Each zone reflected the priorities and ideologies of its occupiers, creating strikingly different paths to recovery.

In the American zone, the focus was on "denazification, re-education, and democratization." As Tony Judt noted, the U.S. sought to “abolish the Nazi Party, tear up its roots, and plant the seeds of democracy and liberty.” U.S. efforts extended beyond politics to include cultural reconstruction, economic revitalization, and the use of psychologists to understand and address the emotional underpinnings of the German collapse. Americans uniquely understood that emotions like fear and hope shaped not just politics but economics.

By contrast, the Soviet zone aimed to suppress Germany's industrial capacity and promote communism. The command economy imposed by the USSR prioritized heavy industry over prosperity, creating stagnation and a legacy of underdevelopment that persisted after reunification.

The French zone was marked by reparations and resource extraction. France’s own communist influence after the war—reflected in a parliament where communists won 26% of seats—meant greater reliance on central planning than in the American zone, though not to Soviet extremes. French policies, combined with less Marshall Plan aid, slowed the zone's recovery.

The British zone, home to the Ruhr Valley’s critical industrial base, initially prioritized controlling industrial output to prevent German rearmament. While this delayed recovery, the region ultimately became a cornerstone of West Germany’s economic strength.

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Why the U.S. Zone Succeeded
The American zone outpaced the others in economic growth, innovation, and cultural development, thanks to its emphasis on market liberalization, infrastructure investment, and fostering entrepreneurship. Success included:
- Economic Hubs
- Frankfurt became Germany’s—and later the EU’s—financial center.
- Munich emerged as a cultural capital and hub for technology and media.
- Stuttgart and Bavaria (formerly more rural areas) transformed into centers of high-tech industries and manufacturing, driven by companies like Siemens and BMW.
- Cultural and Educational Reconstruction:
The U.S. rebuilt universities and promoted democratic ideals, creating a foundation for long-term prosperity.

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The Broader Takeaway
To be clear, Germany was the most advanced economy in Europe - and for quite some time was more advanced than the US. By no stretch of the imagination is its success simply the product of post-WWII American administration. But the difference in the four zones administered by four different countries does suggest lessons about effective governance. The American approach struck a balance between markets and government intervention, avoiding the extremes of Soviet central planning and libertarian laissez-faire economics. This pragmatic strategy fostered stability, growth, and innovation. In contrast, the Soviet zone lagged significantly, and the French and British zones, while successful, lacked the same dynamism.

The division of Germany was more than a political boundary—it was a test of competing ideologies, with the American zone emerging as a model of balanced governance driving long-term prosperity and innovation.

Conversation Starters for Thanksgiving Dinner

At tomorrow's Thanksgiving dinner, here are some conversation starters, rated from safe to hell-bent on never getting invited anywhere ever again:

1. Isn't this delicious? (Safe. Everyone loves a compliment to the chef.)

2. Do you like my hat? (Mildly quirky, harmless.)

3. Do you think AI will make us all smarter but feel dumber, or dumber but make us all feel smarter? (Moderately provocative. Good for the tech-savvy crowd.)

4. Should I put my life savings into crypto, NVDA, or Russian rubles? (Risky. Proceed with caution if you had any plans for enjoying that pumpkin pie.)

5. Do you think Revelation 13:7-8—“And it was given authority over every tribe, people, language and nation. All inhabitants of the earth will worship the beast”—is proof that Trump is the Antichrist? (Nuclear. Just hand them the mashed potatoes and prepare for exile.)

Money Spent on Presidential Campaigns Ballooned After 2010 Citizens United Ruling

U.S. presidential campaign spending has grown dramatically over the past few decades.

The 2010 Citizens United ruling changed campaign finance by allowing corporations and unions to spend unlimited amounts on independent political ads, fueling the rise of Super PACs.

While U.S. GDP has grown roughly sevenfold since 1984, spending on presidential campaigns has increased by an astonishing 154 times. To put it another way: in 1984, campaigns spent about 120,000 times the president’s four-year salary. By 2024, that figure had ballooned to nearly 10 million times the president’s pay—which itself had doubled during that time.

And even with all that, this last election is the first in which we finally got past the amount we spend on Halloween - the other Fall classic designed to frighten people.

Trump's Zero-Sum Notions of Trade and How Far That Falls From The Ideal

In an exchange with my friend Brian Blackwell, we were discussing tariffs. One often-overlooked aspect of this topic is the extent to which the U.S., as a dominant global power—both militarily and economically—could theoretically force trading partners into agreements that disproportionately benefit itself at the expense of other nations. This approach would echo the exploitative dynamics of empires and their colonies, where economic relationships were heavily one-sided.

If you view the world as zero-sum, your goal is straightforward: to take as many of their marbles as possible. But if you adopt a variable-sum perspective, you’d focus on creating arrangements that inspire and enable others to produce even more marbles—or perhaps something entirely new and better.

The first objection to exploitative trade practices is clear: while a monopolist might coerce workers into accepting pay cuts because they lack alternatives, such behavior is widely regarded as amoral. Exploitation—even when driven by power rather than necessity—raises ethical concerns that shouldn't be ignored.

The second objection is subtler but equally compelling. Trade, at its core, is a partnership. If you’re going to engage in trade, wouldn’t you prefer a partner who is prosperous, innovative, creative, and productive—someone capable of generating value comparable to your own? And someone just as excited about your trade arrangement as you are, just as motivated to innovate and profit? Why enter into a trade agreement with 'Dennis the Peasant,' whose only offering is mud? Wouldn't you rather trade with someone rich than someone poor - someone who makes or has great goods and services? A really valuable trade relationship is one where both sides contribute meaningfully, fostering mutual growth and long-term prosperity.
If history teaches us anything, it is that progress emerges from cooperation - from people playing variable-sum rather than zero-sum games and creating wider and wider circles of collaboration and mutual benefit.

American Politics: Rich Communities Voting for More Help for Poor Communities Lose to Poor Communities Voting for More Tax Cuts for Rich Communities

Silicon Valley (SV) and King County, Washington (KCW) have created more wealth—in the form of market capitalization—than all of Europe. Let that sink in for a moment.

Now consider the population difference:
- SV and KCW: 6 million
- Europe: 742 million

That’s right: a tiny fraction of America’s population has outpaced an entire continent in generating financial wealth.

And here’s another striking detail: the Americans who create this wealth happen to live in counties with the highest average wages. Unsurprisingly, they also overwhelmingly voted for Harris in the last election. Just look at the five U.S. counties with the highest wages—they went blue by huge margins.

Cambridge, Massachusetts—the intellectual hub home to Harvard and MIT—gave Harris a 79-point margin of victory. So, the counties that generate the bulk of our financial and intellectual capital were decidedly out of sync with the nation as a whole.

Here’s the weird thing: these affluent communities didn’t vote for policies that just benefit themselves. They voted for aggressive investments in health, education, infrastructure, and subsidies to factories—the kinds of policies that help poorer communities most. Meanwhile, less affluent communities, often struggling economically, voted for policies favoring tax cuts for the wealthy.

It feels like voters are going against their self-interests. Wealthy communities are voting to share the pie, while poorer ones are voting to give the wealthiest an even bigger slice. What’s driving this? Are voters in less affluent areas being misled by cultural wedge issues? Have tax-cut advocates turned elections into culture wars, distracting from policy discussions that would directly improve lives?

It’s a paradox worth pondering: why are those with the most often the ones pushing hardest to help those with the least?