Don’t Show These 4 Charts To Your Friends
- Posted by TheArmoTrader
- on September 10th, 2012
I ran across this post titled “Four Simple Charts to Share With Friends, Family Members, Neighbors and Colleagues” today. It sort of annoyed me. Not because I’m a Pro-Obama campaigner. But because it reminded me (again) why I hate politics. The post is clearly trying to show Obama in a negative light by skewing statistics. I’m fine with that since that is what politics is about. But whoever wrote the post didnt even give a well-thought argument.
So lets quickly go over his “4 charts”. (To view his charts, check out his blog post, not re-posting them here).
And for what its worth, your’e free to show all my charts to all your friends, family members, neighbors and colleagues.
1) He Argues median household income has fallen more during the recovery than recession.
While true, this analysis is wrong. Wages (a big source of income for most Americans) are sticky. Just take a look at wages during the Great Depression. The Depression started late 1929, and it took over 2 years for wages to drop significantly (>10%).
So of course wages aren’t going to drop during (or early on) the recession (especially when most don’t realize early on that there is a recession).
(Solid Line is what you should look at).
2) “Gas prices have more than doubled since Obama took office:”
Again, he’s not lying, but the analysis is horrible. For starters, does he not look what happened to gas prices before Obama took office? It plunged by over 60%. And remember, just like trading, its easier to double your money on the long side than the short side. So a “double”, while sounds scary, is not abnormal when prices plunge from 4.12/G to 1.61/G and the world economy (GDP) recovers by 20%.
Besides, I didn’t know Obama was the price-setter of a commodity that trades in a global market (which is largely controlled by OPEC). And even if you were to blame the $FED for this, Obama has no control over their policy decisions.
3) Labor Force Participation Rate Goes Backward to 1981
Again, this is true. But once again it fails to analyze other stuff.
Are people leaving the workforce because they cannot find jobs? YES. I do not deny that. But that is not the only reason.
A) People are returning to/staying longer in school, in order to (statistically) have a better chance at a job (UE rate of those w/ Bachelor Degree’s is at 4%, half of the nations average). While the rate was not at the high in 2011, the trend for the past decade is up. I can’t find solid year-by-year data of those 25 and older, but according to the NCES, the rate of enrollment for 25+ increased by 42% from 2000 to 2010 (compare that to 34% for under age 25). The NCES expects an increase of 20% from 2010 to 2010 for those 25 and older (while only 11 percent for <25). In fact, one-third of college students are over 25. So there is a definite trend for (older) people returning to college.
B) The US rate is “mean reverting” to the average trend when compared to developed countries.
C) People are retiring. This was BOUND to happen given demographics. I’ve laid out the argument in this post.
4) The ‘One-Time’ Stimulus Became Part of the Federal Baseline Budget
The argument was that the stimulus was supposed to be a “one-time” thing. Um, the stimulus was called the “American Recovery and Reinvestment Act” for a reason. The “Reinvestment” part doesn’t happen at once. Investments are supposed to generate returns for the future.
And besides, without the stimulus, we would’ve been easily been in a depression. The Stimulus “worked” (check the 15 charts that I linked to).
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Jerry Khachoyan is currently an undergraduate student at UCLA pursuing a degree in Political Science. He started trading in September of 2008. He concentrates on using technical analysis and reading the tape to enter the best risk/reward trades. The stock market to him is one of the greatest inventions by man.
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