Almost forgotten in the rush of doom-and-gloom headlines about the spread of coronavirus and Monday’s record-breaking stock market sell-off is President Trump’s two-week-old advice to would-be investors to buy stocks.
Though the first market jitters over the economic impact of coronavirus had already led to consecutive triple-digit losses, Trump posted an optimistic appraisal of the investment landscape on Feb. 24.
The Coronavirus is very much under control in the USA. We are in contact with everyone and all relevant countries. CDC & World Health have been working hard and very smart. Stock Market starting to look very good to me!— Donald J. Trump (@realDonaldTrump) February 24, 2020
Hours after Trump’s tweet was published, the Dow Jones Industrial Average closed at 28,992, down 227 points.
A day later Larry Kudlow, Trump’s director of the National Economic Council, made a second appeal on behalf of the beleaguered stock market.
“The virus story is not going to last forever,” Kudlow said in an interview. “I would suggest very seriously taking a look at the market, the stock market, that is a lot cheaper than it was a week or two ago.”
Despite Kudlow’s optimism, the Dow fell another 1,031 points that day, to close at 27,912.
In fact, that week turned out to be the worst for the stock market since the 2007 financial crisis, with the Dow losing 3,500 points and wiping out $3 trillion in value.
On Feb. 27, three days after offering his stock market tip, Trump announced he was appointing Vice President Mike Pence to head up his coronavirus task force, which also included Kudlow. During a White House press conference, Trump assured assured the country that the number of Americans infected with the virus “was going very substantially down, not up,” and that “within a couple of days” the tally would be “down close to zero.”
Perhaps buoyed by that infectious confidence, Trump’s son, Eric, jumped on the “buy the dip” bandwagon.
In my opinion, it’s a great time to buy stocks or into your 401K. I would be all in... let’s see if I’m right...— Eric Trump (@EricTrump) February 28, 2020
But just as the number of cases did not go down as Trump had foreseen (the number has risen from 60 confirmed cases at the time of Trump’s press conference to over 600 as of Monday), the stock market proved an equally bad bet.
On Monday, it fell 2,014 points, the largest single-day point loss in history, and closed at 23,851. For those keeping score at home, that’s more than 5,000 points lower than when Trump proclaimed the markets were starting to look good.
Of course, Trump isn’t the first president to encourage Americans to invest in the stock market. On March 3, 2009, then-President Barack Obama saw an opportunity to buy following a nearly 300-point dip in the Dow, which at that time had fallen to 6,726 points in the wake of the Great Recession.
“What you’re now seeing is profit-and-earnings rations are starting to get to the point where buying stocks is a potentially good deal if you’ve got a long-term perspective on it.”
From the time he said that through the end of his presidency, the S&P 500 rose by nearly 225 percent.
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