The Dow Makes an Orderly Retreat

Headlines screams we’ve just suffered the worst lost in the Dow EVER. True, only if your measurement is points, which misses the . . .er . . . point.

To compare relative losses what counts is the percentage drop not the number of points. Losing 100 points if the Dow started at 1,000 hurts exactly the same as losing 1,000 points if the Dow is at 10,000.

Given that, how did February 27, 2020 stack up? Not even in the top twenty percentage points lost[i].

I remember very well the worst day for the Dow: October 19, 1987. I was at a Society of Actuaries meeting in Canada. The Dow dropped “only” 508.0 points, but that equaled 22.61% of the index. In a single day. And not only that, but according to a friend of mine, also at the conference, who worked for one of the large investment banks, for much of the day, no one really knew what prices were because trading essentially stopped.

For perspective, the Dow closed its all-time high on February 12, 2020 at 29,551.42. It has dropped 12.81% since that high.

On October 28, 1929, the Dow lost 12.82% in a single day. (That’s the second worst percentage drop for a day.) On October 29, 1929, it dropped another 11.73%, and on November 6, 1929 it peeled off another 9.92%.

Unlike the 1987 sell-off, markets have been orderly. There has been no panic.

If you are still working, think of this as a 12% off sale on your next 401(k) contribution!

If you are retired, consider that on March 9, 2009 the Dow closed around 6547 and we are still up nearly 400% from that date. (Most of which occurred during President Obama’s term, not President Trump’s.)

What will tomorrow bring? I do not know. Another slide is justified by some because supply chains are still being damaged and more companies will report they are lowering their first quarter 2020 earnings estimates .

A dead-cat bounce is proposed by others because they believe the market has not recognized the Fed will soon lower interest rates to offset some of the damage.

A strong buy opportunity is proposed by others who think this virus is just a blip that will make us stronger in the end—and, housing starts are still on the rise with unemployment at all-time lows.

If you’re not against alcohol, I suggest a nice glass of wine, beer, or cocktail to take the edge off.

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James M. Jackson authors the Seamus McCree series. Full of mystery and suspense, these thrillers explore financial crimes, family relationships, and what happens when they mix. False Bottom, the sixth and most recent novel in the series is set in the Boston area. You can sign up for his newsletter and find more information about Jim and his books at https://jamesmjackson.com.

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[i] https://en.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_Dow_Jones_Industrial_Average

How Democratic Billionaires Could Save Democracy

Billionaires have, apparently, decided the way to save the United States is to become president. Trump (assuming he is a billionaire—who knows since he hasn’t released financial statements?) won the presidency in 2016. Billionaires Steyer and Bloomberg want to run against him in 2020.

Media reports suggest Steyer has spent over $100 million of his own money on a campaign that hasn’t yet earned him a single delegate. Bloomberg started later and has spent over $300 million. Are they the most qualified Democratic candidates? I’ll let you decide that for yourself. For argument’s sake, let’s say they are, but agreed instead of trying to get themselves elected, they would back whoever else the Democratic party chose for their candidate and spent their $400 million (and counting) on making sure everyone who wanted to vote in the November general election could.

Here are a few things they could have done with their bucks (and still could):

Voter Registration & Encouragement

Billionaires could support voter registration drives. I’d prefer these were nonpartisan because supporting democracy means giving every eligible person the opportunity to participate in elections.

All states have methodologies to remove no-longer-eligible voters from their rolls. How each state defines eligibility varies. Many states have use-it-or-lose-it laws to purge people from their rolls because they have chosen to not vote in previous elections. Legal, but one problem is those same states often have registration requirements that won’t allow the purged to re-register in time to vote in the next election. In 2017, Georgia used its law to remove more than 100,000 people from its voter rolls for this reason alone.

What if the billionaires funded an outreach program to have someone visit each removed person to make sure they understood they could no longer vote and provide them information about how to re-register? Let’s say it costs $100 a person for such a visit. $1 million bucks could make sure Georgians knew their rights. It’s not the same in all fifty states, but if it were, it would total $50 million to make sure people could vote.

They could spend money to support same-day registration initiatives. With proof of residency, why shouldn’t we allow citizens to vote?

Many states have implemented Voter ID requirements. What would it cost for the billionaires to fund efforts to provide approved voter IDs to all those who don’t have them?

Transportation

Some people want to vote but can’t get to the polls. What if the billionaires provided the dollars to hire ride services for anyone who needed transportation for primaries and general elections? How many thousands of potential voters could benefit? I don’t know, but they are likely to be poor or disabled; otherwise they could afford transportation. These groups favor Democratic policies.

This could only be done in states where it is legal. Michigan Republicans enacted a law making it illegal to pay for a vehicle to transport an able-bodied voter to the polls. It’s a misdemeanor charge that could result in up to 90 days in jail and a $500 fine. Their supposed reason is that people could be influenced to vote the way the driver wants the individual to vote—baloney, since the driver can’t assist with the actual voting process.

Court Challenges

Politicians in power have used laws to perpetuate their hold. Gerrymandering is one example most people know. Recently, Republicans have controlled most of the state legislatures and so have been the ones making sure to draw districts to their advantage. If Democrats were in power, they’d likely be doing the same thing.

Billionaires interested in promoting democracy should invest in defeating gerrymandering efforts. Here’s one worthy example: In 2018, Michigan voters approved by 3-2 the creation of an independent redistricting commission. It replaces the current system in which the state legislature gerrymanders districts. Republicans (who had control of all three branches of government prior to the election) sued to overturn the voter-approved referendum.

Voting Machines

It’s crucial to have paper ballots back-ups to electronic voting to be able to recount ballots should there be any irregularities (whether or not malicious). Many districts can’t afford to provide capable voting machines. Billionaires could buy and donate the machines to help secure our elections.

Much more

I’ve barely scratched the surface of ways Democratic-leaning billionaires can help return voting power to people. What do you think?

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James M. Jackson authors the Seamus McCree series. Full of mystery and suspense, these thrillers explore financial crimes, family relationships, and what happens when they mix. False Bottom, the sixth and most recent novel in the series is set in the Boston area. You can sign up for his newsletter and find more information about Jim and his books at https://jamesmjackson.com.