The Bottom Line Behind the Bottom Line
Leanna Bornkamp, Vice President
If one thing has been certain this week, it is that most of us are still reeling from the results of last Tuesday’s election. Some of the promises offered to the American public have the nation divided; some are certain of better days to come, others are worried about potential damage to the foundation of our democracy.
There is, however, one conspicuous group that seems to be relishing particular promises of relaxed financial regulation: Wall Street analysts, traders, investors—former B-School students.
Reports of panicked bankers were abundant on Wednesday morning, as the markets reeled with confusion and, for some, fear that end-of-year bonuses were suddenly in danger. And yet, just days later as the results of the election began to truly settle in, the Dow Jones was closing at record highs with growth rates not seen since 2011, the NASDAQ Composite Index hit its highest point ever, and the S&P 500 had its most dramatic growth since December 2014.
Those trying to peel apart this growth have attributed much of it to optimism related to regulation—or, rather, what may be a lack of it in our new political climate.
And it makes sense—a billionaire businessman, a rampant capitalist known for taking advantage of the system in ways that Wall Street suits dream about, in the White House. Better still, that billionaire businessman is walking up Pennsylvania Avenue spouting promises of unprecedented growth, deregulation, and protection from the big-bad-wolf that is free trade. That, as well as the anticipation of increased fiscal spending in a world of border walls, infrastructure improvements (hopefully) and a new focus on domestic manufacturing, had Wall Street jumping for joy (literally; take a look).
November 16 was the first time the Dow had even a hiccup since the election results were settled. Although this is certainly a testament to the fluidity of investor perceptions, the markets are still, largely, up.
Great—let’s sell our houses, invest in construction companies, settle in and watch a booming economy work wonders on our portfolios. But, in the time not spent worrying about our assets, we would do well to take a look at the implications of this improvement to our financial outlook.
What does this mean for us, as contributors-in-training to this system, that our chosen career paths feature many people rejoicing in advance, looking forward to days of increasing bonuses—financial gain that may be achieved on the basis of legislation that may damage the less fortunate members of our society? Any economics professor will be happy to tell you that, in a capitalist society, money makes its way to the most efficient places, and the market will, in theory, work itself out with limited collateral damage. But many are afraid that this isn’t true, or trivializes the concept of collateral damage when it should be expressed in terms that are far more personified. And such fear, in many ways, is what has divided public opinion in this society in flux.
Business schools and their students have an obligation to look for the method in the madness, in the spikes and crashes, in the speculation—the bottom line behind the bottom line. Our community at NYU has already proven, in this past week, its ability to come together with impressive strength in the face of discrimination and other barriers to freedom of speech and intellectual development. Our charge, as Stern students—as the next crop to enter the “real world” of business and to react to events like 2016’s election, with implications beyond our immediate circle—is to find ways to look beyond the promise of a fruitful future for ourselves, and to do our best to pursue one for everyone impacted by our decisions.
We can make our Stern community proud through more than just reflections on our financial success. Let’s get started.