History suggests the initial reaction by investors after a U.S. election isn’t always the right one
How could so many asset classes be wrong?
Actually, quite easily. The danger is that investors are responding to their own prejudices, then receiving reinforcement from one another. While the market is internally consistent, that isn’t enough if it has misjudged the big picture—as it often does on the economy, and even more so on presidents.
.. Take the 2013 taper tantrum, or a period in 2010 when markets bet big on a rapid postrecession recovery—only for panic to set in when the economy proved weak.
.. But history suggests markets aren’t that good at judging presidents. And that presidents just aren’t that important to stock prices. The worst performance of U.S. stocks between Election Day and Inauguration Day came ahead of Franklin Roosevelt, Richard Nixon and Barack Obama’s first terms and Lyndon Johnson’s 1964 election, according to calculations by Birinyi Associates. Yet after FDR and Mr. Obama took office, the market boomed, while it did perfectly well under Nixon and LBJ.
The market wildly misjudged the potential of Herbert Hoover. His election-to-inauguration stock price jump hasn’t been bettered, but the 1929 crash was on his watch and no president since has overseen such poor returns.
Herodotus did it in Greece; Sima Qian did it in China. Of the other great civilizations—the Mesoamericans, the Egyptians, Summerians, and their descendants, the Andean kingdoms, the early rulers of the Eurasian steppe, the great empires that sprouted up along the Indus and Ganges rivers, along with their cultural satellites across South and Southeast Asia—history is nowhere to be found.
.. I remember my shock when I discovered our knowledge of ancient India relies more on ancient Greek historians than ancient Indian historians. Traditional Indic civilization simply did not have any.
.. To restate Sima Qian’s experience in less emotional terms: because he was principled enough to contradict the emperor in the presence of his court, Sima Qian was sentenced to castration. This was a death sentence—any self-respecting man of his day would commit suicide before submitting to the procedure. Everyone expected Sima Qian to do so. But in the end Sima Qian decided to accept the punishment and live the rest of his life in shame, because if he did not he would never finish the history he had started.
.. We remember Wudi as Sima Qian chose to depict him. Had Wudi realized the influence his court astronomer would have on future generations, he might have treated him differently. But Wudi realized none of this. Sima Qian was published brutally and embarrassed publicly. He was a loser.
But in the end, the loser got his revenge.
.. We say that history is written by the winners. That is sometimes true. We have no Carthaginian accounts of their war with Rome; few historians today have much sympathy for Hitler. But the thread that seems to connect many of the great histories of the pre-modern world is that they were written by the losers.
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In his roundtable post, “Treason Makes the Historian,” Lynn Rees lists a few of the type. Herodotus wrote his history only after his exile from Halicarnassus; Xenophon wrote his memoirs only after his faction was forced out of Athens. Polybius was once a general for the Archean League, but wrote his history as a hostage at Rome. The destruction of Judea was chronicled by a Josephus, a Jew.
These men abandoned their countries and people for the victors of the future. But Quislingdom was not the only losing path to historical fame. Tacitus’s loyalty to Rome never wavered—but neither did his identification with Rome’s Senatorial class, a group whose power was slowly stripped away as Tacitus wrote his chronicles. Sima Guang, the second most significant historian of Chinese history, only finished his massiveZizhi Tongjian after court rivalries had forced him to retire. The history of the Mongols was written almost entirely by their vanquished enemies. Ibn Khaldun was associated with so many failed regimes that it is a wonder he found time to write his history at all.
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Thucydides’ obsession with Brasidas is easy to understand once his personal relation to Thucydides is made clear. His portrayal of Brasidas as daring, brilliant, charismatic, and clever beyond measure also begins to make sense—the greater Brasidas’ past feats appear, the less damning Thucydides defeat at his hands becomes.
Thucydides treatment of Brasidas is hardly unique. You can play this game with many other aspects of Thucydides’ History, from his attitude towards Athenian democracy (which voted for his exile) to his unflattering portrayal of Cleon (who replaced him). Thucydides lost battles with them all. The History of the Peloponnesian War was written by a loser.
Why have so many great histories been written by the losers?
.. Defeat gives brilliant minds like Thucydides the two things they need to become great historians: time and motive.
.. Those who rule do not have the time to write about it
.. Even winning historians need time in defeat to write their histories—had Churchill’s party not been kicked out of power by British voters after the Second World War was over, Churchill’s famous account of that war would never have been written.
.. When high position is stolen from you, and access to the heights of wealth and power denied, there is little one can do about it—except write. History is thus rarely a “weapon of the weak.” The judgments of the historian do not serve the margins. They do not even serve the masses. They are a weapon in the hand of defeated elites, the voices of men and women who could be in power, but are not.
Casting his net more widely to include all talk of “privilege,” from male to cisgender, essayist Joseph Bottum has observed that the concept is functionally equivalent to original sin. “I have to every day wake up and acknowledge that I am so deeply embedded with racist thoughts and notions and actions in my body that I have to choose every day to do anti-racist work and think in an anti-racist way,”
Leftism has become a religion, and what we are seeing now is a revival.
The revivalists testify from behind megaphones instead of pulpits and in “safe spaces” instead of country churches, but they stand squarely within the American tradition of converts who spread their gospel by bearing their witness. The way they keep bursting into tears is a clue.
.. The enthusiasm for personal denunciation that sets the present eruption apart from the usual PC background noise is a trademark of American revivals, too. When colonial congregations invited George Whitefield to preach for them, they quickly learned to ask in advance that he not sow dissension by denouncing local worthies by name. No
.. One reason Finney was the most popular revivalist of the Second Great Awakening was that his audiences derived a certain frisson from knowing he would call out by name any deacon he’d heard was an adulterer and any shopkeeper he’d heard saying “dammit” in the street.
.. He was more proud of it than of his more famous innovation, the “anxious bench.” But it’s not as if other preachers didn’t know that they could call down the 19th-century equivalent of a Twitterstorm on any parishioner they wanted. They just didn’t think it would be tactful. Tact, that pillar of decency, is not a principle so much as a truce. To break it, a person needs only to believe that he and his ideas are more important than other people.