What if the Stock Market Sold Off for 3 Years?

October 7 Stock Market Sell-Off

Despite a trillion dollar bailout, the stock market is still selling off as I said it would. Reports today say $2 trillion in retirement fund savings have been wiped out. How long will this continue?

After the April 1929 stock market crash, the market didn’t stop selling-off (declining) until April of 1932. That’s a 3 year stock market sell-off. Herbert Hoover, a Republican, served as President of the United States from 1929 to 1933. Hoover inherited a crashing economy, and despite no bailouts, the economy and stock market began to recover on their own in 1932, which is one year before Hoover exited his term as President.

Franklin Delano Roosevelt, a democrat, was elected and served as the United States President from 1933 to 1945. When Roosevelt took office he increased taxes on businesses, and implemented all sorts of spending for social programs. The stock market stopped rising, and due to increased taxes, the economy stopped growing, and leveled off. Some economists say because Roosevelt increased taxes, he extended the great depression until after Harry S. Truman, who was also a democrat, and Roosevelt’s successor, left office in 1953.

Dwight D. Eisenhower, a Republican, served as President of the United States from 1953 until 1961. The stock market started a huge rise during the Eisenhower administration, and officially rose above the 1929 stock market high. This period of time marked the economy and stock market officially exiting the great depression.

The stock market stopped rising, and the economy once again stopped growing, in 1961 when John F. Kennedy, a democrat, became President of the United States.

The stock market and economy remained stagnant until 1982. Ronald Reagan, a Republican, served as President of the Untied states from 1981 to 1989. The preceding President, Jimmy Carter, a democrat, had caused a lot of damage to the economy causing it to go into another recession. Ronald Reagan got to work lowering taxes on businesses to help create jobs, and help entrepreneurs create companies like Costco. About a year after Reagan took office, in 1982, the stock market started it’s historic rise, and our economy grew to historic heights as well. The Dow Jones rose from 811 in 1982 to 13,895 at its peak in July of 2007. All Presidents since Reagan left office in 1989 have benefited from policies Reagan implemented in his administration.

In 2004, the mortgage companies, Fannie Mae and Freddie Mac, created by democrats in congress, finally began to crumble without any oversight. Those two mortgage companies were created as a social entitlement program, that allowed people who could not afford a home mortgage to get one anyway, with the Federal government listed as the co-signer on those bad loans. Starting in September of 2008, it became clear that those failed democrat institutions were collapsing, and as they collapsed, Fannie Mae and Freddie mac caused the United States financial system, and all other financial systems around the world, to also collapse.

Now we are faced with a decision exactly as those who faced the great depression, with the exception that we know what happened from 1929 until 2008. The change we need is to avoid history repeating itself.

Should we elect a democrat who promises to raise taxes, or a republican who promises to lower taxes and create jobs like Reagan did.

Click here to see the Dow Jones Industrial Average chart on Yahoo.

Dow Jones Historical Chart from 1929 to 2008