Page 11 - Soundwave Magazine
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                 through the nose for stocks. The “earnings multiple”—share prices as a multiple of profits—is steep, at 21.6 for the S&P 500, far above the long- run average of around 16.
Election years tend to be turbulent for stock markets. Over the past century, America’s has been more buoyant in the first two years of a presidential term than in the final one. And investors are worried that the Democrats will pick a nominee from the party’s radical left. When Elizabeth Warren was rising in opinion polls in October, hedge-fund managers warned that markets would fare poorly under her.
In October Paul Tudor Jones of Tudor Investment, a hedge fund run from Palm Beach, claimed the stock market would fall by 25% if Ms. Warren were to be elected
president. The Wall Street Journal has reported that Bridgewater Associates, the world’s largest hedge fund, has spent $1.5bn on derivatives that will pay out if the S&P 500 falls by March. It is hard to tell much about a fund’s portfolio from a single trade (and Ray Dalio, its founder, denied that the trade is representative)—but that is around when it will become clear who the Democratic nominee is likely to be.
Fears in 2018 for the year ahead proved misplaced. Those for 2020 may be, too. But investors should not bank on it. Only 12 times since 1928 has the S&P 500 posted a better return than it did in 2019. Each time, the following year turned out weaker than the one that came before. More ominously, in four returns were negative.
BETWEEN THE LINES
The new US-China trade deal marks an uneasy truce
Jan. 16th 2020. With his habit of announcing trade deals only for them to dissolve within weeks, President Donald Trump is a standing reminder that talk is cheap. But on January 15th he signed a phase one trade agreement with China alongside Liu He, the Chinese vice-premier, and published its contents for the world to see. The 86 pages set out the terms of a new economic relationship
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