CNBC Guest: Markets Collapsing Because Traders Thought Romney Would Win

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CNBC's market analysts offered a dark view of how the American has reacted to the reelection of President Barack Obama on Thursday ' not since the reelection of Harry Truman in 1948 did the market react so poorly to an incumbent president's reelection. One CNBC guest said that the market had factored in the election of Mitt Romney and was gaining ground in 2012 only on that assumption.

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In an interview with CNBC host Joe Kernen, Barclay Capital's Barry Knapp said that the market's response to the reelection of President Obama has been dismal. The only historical parallel he could draw was the reelection of President Truman in 1948, which preceded a significant decline in the American economy and a deep recession.

'Do you think people were still holding out hope that Romney was going to be elected, and there wouldn't be Obamacare, there wouldn't be tax increases,' Kernen asked Knapp.

Knapp said that the 2012 election's only parallels are with 1948 and 1980. 'In 1948, going into Truman's reelection, the market was falling,' Knapp began. 'The economy looked identical to today. The housing market was improving, consumer spending was fine, but capital spending was weakening. And then after Truman was reelected, we went into recession. The market went down a lot.'

Knapp said that the 1980 parallel shows how the market reacted to the notion that Reagan was going to win, and when he did the market rallied by 10 percent.

'The Market acted like it was 1980, but it turns out it was 1948,' said Knapp. 'I think a lot of the resiliency and performance in the market this year was tied to this idea that Romney was going to win, and the market was above where I thought it belonged on core fundamentals.'

Watch the clip below via CNBC:

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• Had over-invested in Romney futures, had they? Well that was good money for bad.

• Why do these Republicans keep making these short-term predictions, which are very soon proven wrong? Today, so far, the markets are stable. Yesterday, the Dow shed 300'not a great day but not a 'collapse' by any means (we've seen these sort of minor dips for many years now). Economists, by and large, expect the economy to only improve over the next 2 years, as long as Europe doesn't tank.

  When Bush left office, the Dow was around 6,000 (I'm off by a little, I know). Today, it's just under 13,000. It didn't spike overnight or when it became apparent that Romney was going to win, like this idiot is suggesting. If the market is artificially high because investors thought Romney would win, why was it so high a few months ago when Obama was way ahead in the polls and everyone was talking about a landslide? Why was it high a couple of years ago, before the Republicans had even nominated someone?

  This guy doesn't realized how flawed his thinking is and yet people are supposed to invest their money with him?

• Keep it comin' Rothy' Keep it comin'' Your anger/denial/shock/more anger/lashing out at all things liberal is a sight to behold. I eagerly await your 'column' claiming conservatism didn't lose in 2012, urging party leaders to run a 'real' conservative in 2016' yeah, that'll do it! You may want to include the facts that 'conservatism' has lost 5 of the last 6 popular votes and hasn't sniffed President Obama's 'non-mandate' 330 EV's since you were in diapers!!! Keep it comin'!!!!!!!!!

• Noah is off the deep end again'.The market was down over 400 after Obama's election in 08'also, the market was flat until a story came over the wire abour weak GDP in Germany'
  Lets not let the facts get in the way of one of Rothman's stories'

• Yes'The market has only doubled under Obama. It's 'collapsing'.

  Noah'seriously dude, buy yourself a dictionary and carry it with you.

• I wouldn't trust any trader on Wall Street 'banking' on a Romney win. These guys are supposed to be good at separating logic and prudence from wishful thinking.

• A big Romney backer comes on to whine on CNBC. That's your idea of news, huh?

• OH BOO HOO.

  Wall St loses money ' rest of country doesn't care.

  Wall St. isn't the economy. Certainly doesn't reflect most people's lives working on Main St. We are supposed to feel bad for the rich elite's loss?

  They probably tried to fabricate a selloff anyway to make Obama look bad.

  They manipulate their lower-tax market every day to make money anyway.

• Not only does the market not work that way, but if these investors truly thought Romney was going to win, they're really bad at their job.

• I guess that's why you should invest in reality based investments.

• the reason for the numbers was: europe, specifically uncertainty in austerity measures with germany

  so the market has DOUBLED since obama took office and suddenly dives ?

  Looks like they need to read the new Nate Silver Book: Signal vs. Noise

• Whenever the stock market goes down, it's Obama's fault. Whenever it goes up, it is in spite of Obama.

  Don't you understand how this works yet?

• So, you are reading 'the American' to mean the American stock market. It makes more sense if you read it 'the American Legion'.

• 'Analysts offered a dark view of how the American has reacted to the reelection of President Barack Obama'?

  The American' what? Does anyone check these before they are posted?

• When they drink that Con-Ade it really messes up their logic circuits.

• Who knows what else the voices in his head are telling him'

• No.

• Actually the drop yesterday does affect everyone when their portfolios decline due to the intentional sore loser sell off.

• Any trader who thought Romney would win and used that as an investment strategy should not be handling other people's money.