The Lula Rally

Yale’s Robert Shiller looks at the Brazilian stock market. Since Lula took over in 2002, the stock market is up over 300%.

Stock-market movements are certainly hard to explain, but there are reasons to believe that Brazilians might be rationally exuberant. Corporate earnings in Brazil have gone up roughly as fast as stock prices. With the price/earnings ratio remaining stable and moderate, the stock-market boom does not appear to reflect mere investor psychology.
On the contrary, the real question is why the increase in stock prices has not outpaced growth in corporate earnings.

Apparently, leftists are having a love affair with the stock market. Or at least, a good stock market.
Well, maybe not all leftists. Hillary’s gone 100% cash:

Given her history — recall her preposterous cattle future windfall — Mrs. Clinton is bound to be sensitive about her financial dealings. But in recent history, few candidates have felt compelled to go to an all-cash asset allocation to avoid potential conflicts. Al Gore, who in 2000 made a point of saying he avoided all stock-market investments, is a notable exception, if not one Mrs. Clinton should be eager to emulate. His populist campaign riff was a bust.

But in retrospect, wasn’t Gore’s timing pretty good? (Also, going by the numbers, I’m not sure his campaign was a bust.)

Posted by on June 18th, 2007 at 6:53 am


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