Presidential Stock Market Returns

We’ve been busy crunching data from the Measuring Worth website on the Dow Jones Industrial Stock Index returns for each Presidents’ administration  going all the way back to Teddy Roosevelt.  We find the data very interesting and will, mostly, let it speak for itself.   Note,  President Obama still has about 20 trading days left in office.

presidential_stock_table_dec16

A few caveats,  the returns should be discounted for the total days in office.  For example,  FDR was elected to four terms and served 4,422 days in office before his death in April 1945, while JFK served only 1,035 days before his assassination and Gerald Ford, 894 days, finishing out what was President’s Nixon second term.  In general, the longer the time frame, the higher the return.

Also Measuring Worth notes,

Observations from October 7, 1896 to July 30, 1914 are from the first DJIA and has been adjusted to merge with the second series. See Source Note for DJA.

presidential_stock_chart_dec16

Roaring Twenties Top All
No doubt the 1920’s were truly “The Roaring Twenties!”   Check out the returns of Calvin Coolidge, add that to Warren Harding, who died in office in 1923, and couple those with another almost 20 percent move higher in the first 6 months of the Hoover administration before rolling over hard on Sept 3, 1929.  That was one helluva bull market and stock market bubble.

President Clinton also presided over a huge stock bull market and bubble with the Dow peaking at 11,722.98 on January 14, 2000.  President George W. Bush inherited the bursting bubble that did not bottom until almost  two  years into his Administration  at  7,286.27 on October 9, 2002.  The Dow thus plummeted 38 percent from the Clinton peak to the Bush 43 trough.

The Dow doesn’t do justice to the magnitude of the Clinton bull market/bubble as the dotcoms of the NASDAQ rose and lost much more,  more than double the Dow returns.  We were forced to use the Dow Jones Industrial Average as it was the longest running time series.

W.’s Bookend Bubbles
President Bush 43, with the second worst  Dow performance,  inherited a bursting bubble from President Clinton and handed off a bursting stock market — more of a bursting credit bubble — to President Obama.

The only reason we are all not living under a freeway and eating bark — i.e., a Great, Great, Great…. Depression — is the heroic and decisive efforts of Team Paulson, Bernanke, and Geithner.  Add Barney Frank to that list, who led Paulson’s effort on Capitol Hill — ironically, fighting against the Republicans, who initially opposed their own White House’s  stablization policies.  That was, until the Dow fell 777 points after the House’s first thumbs down vote on the Troubled Asset Relief Program (TARP)

.As it turns out, the House actually had to vote twice for the particular bill in which TARP was included. The first vote was on Sept. 29, 2008. The legislation failed to move, though, with 205 representatives voting in favor and 228 against. Of those who voted for the the passage, 140 were Democrats and 65 were Republicans.  – PolitiFact

If only these guys  and their collective knowledge  had been around in the early 1930’s,  maybe……..?   If, only.  But, hey,  then Bernanke wouldn’t be an expert on the Great Depression.   We are going to post an interesting piece on the Hoover administration next week. Make sure and look for it.

Nevertheless, the Dow was already crashing before the October 1929 crash, already down 31 percent from the September peak on the eve of the “Black Tuesday” crash and hit a short term bottom in November.  It banged around for about a year until the financial system suffered some major hits and the Fed failed to provide the necessary liquidity to prevent bank failures.  This, as Ben Bernanke likes to say, put the “Great” in the Great Depression.  The U.S. was considered in just a normal recession and appeared poised for recovery until the banks started to fail in the late 1930’s and 1931.

Yeah, yeah, yeah… we get it, some of these guys were partially responsible for creating the 2007-09 bubble and economic/financial imbalances in the first place.  And that angers us as much as you.  But, seriously, folks,  let’s not quibble when the house is burning down.  Let’s get the fire put out first!

“If you have a neighbor, who smokes in bed. And he’s a risk to everybody. If suppose he sets fire to his house, and you might say to yourself, ‘I’m not gonna call the fire department. Let his house burn down. It’s fine with me.’ But what if your house is made of wood? And it’s right next door to his house? What if the whole town is made of wood? Well, I think we’d all agree that the right thing to do is put out that fire first, and then say, ‘What punishment is appropriate? How should we change the fire code? What needs to be done to make sure this doesn’t happen in the future? How can we fire proof our houses?’ That’s where we are now. We have a fire going on.”   – Ben Bernanke

Facts versus Political Opinion
We’re  trying to state facts and make objective inferences from the data here.   Conflating facts with opinions or not being able to distinguish the difference between the two are the very  reason our democracy is faltering, in our opinion

It’s dangerous and we should heed the words of Thomas Jefferson,

“If a nation expects to be ignorant and free in a state of civilization, it expects what never was and never will be.  If we are to guard against ignorance and remain free, it is the responsibility of every American to be informed.”  – Thomas Jefferson

Look at, for example,  the stunning result of this opinion poll taken in May by  Public Policy Polling:

pp_stockmarket_poll_dec17

It is a fact the stock market has gone up under Barack Obama.  Not political opinion, but fact.   Yet by a margin of almost 30 percent,  those Republicans polled believe the stock market has gone down under President Obama.  Who are these people?

And this,

ppp_unemployment_poll_dec17

It is fact,  unemployment has gone down under President Obama, almost halved.

unempolyment_rate_dec17

This poll may be an aberration, but we can’t help but think that American democracy is in a bear market.   Fake news, facts are political opinions,  all the rage!   Lord, help us.

Now Ready For Some Data Partisanship?
You know we are fairly non-partisan over here at Global Macro Monitor.  In fact, our party affiliation in our state defines us as,

Voters who registered to vote without stating a political party preference are known as No Party Preference (NPP) voters.  NPP voters were formerly known as “decline-to-state” or “DTS” voters. – California Secretary of State

Nevertheless, let us finish with some data that kind of blew us a way.

The following table looks at the average of the returns of Democrat and Republican administrations on the Dow Jones since Teddy Roosevelt.

presidential_partisan_dec16

Absolutely stunning.

The average return on the the Dow Jones Average return under Democratic regimes is more than double than the average for all the Republican regimes – 92.17 percent vs. 44.85 percent, respectively.  Just the facts, ma’am!

Furthermore,  all of the Presidential administrations where the Dow return was negative were Republican.  That is kind of astounding given the popular perception that Republicans are best for the stock market, no?

Note, President Carter squeaked out a positive return, 0.24 percent,  probably due to the 3.6 percent Reagan rally from the eve of election day to his inaugural.  Interestingly,  the Dow rallied 6.72 percent from the eve of the election on November 3, 1980 to November 20th before hitting key resistance at Dow 1,000,  then rolled over.   Also note,  traders sold the news and the Dow fell 18.28% from the Reagan inaugural to August 12, 1982 as the economy was in the throes of a deep recession.

Will the same happen with the Trump rally?  The Dow is up 8.67 percent since the eve of his election.  Trump inherits a much stronger economy than President Reagan, however, but the Reagan bull market had the tailwinds that it was the beginning of a 35-year bond bull market, which began in September 1981, where the 10-year Treasury note peaked around 16 percent,  and drove almost every asset class from real estate to stocks.

The incoming Trump administration faces the prospect of the end of the bond bull market and rising interest rates, however.   Stay tuned on this one.

 Interpreting the Data
We could massage and nuance the interpretation of this data until the cows come home.

Yeah, the data is skewed by Hoover, but the same can be said by Coolidge’s 262 percent return, no?   Yes,  Obama almost bottom ticked the Dow and W. inherited a major bear market from Bill Clinton.  Or, whatever.

What is really impressive is the over 40,000 percent increase  in the index since TR took office in September 1901.  That is a long-term affirmation and confidence in our country and confirms our view to “never short America”  over the long-term.

Was Truman Right?
So,  after looking at the data, maybe President Harry S Truman was right when he stated:

Harry Truman Quote.png

There you have it, folks.  Let the debate begin.

 

 

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3 Responses to Presidential Stock Market Returns

  1. Larry R. Wagner says:

    Great analysis, Gary. Really makes me think – which is a dangerous thing.

    Another way of looking at it is how many times was the market up or market down by party:

    With 8 Democratic presidents the market was up 8 times, down once and flat once. With the eleven Republican presidents it was up 7 times and down 4 times.

    Does that mean the Democratic presidents are better for the market than Republican? Perhaps.

    But, when you look at the details, was Hoover responsible for the Depression or did it just happen to occur on his watch and would have happened not matter who was president.

    Did FDR pull us out of the Depression or did WWII? Where was the market level in 1941?

    Did Clinton cause the dotcom bubble or just benefit from it? Did Bush cause the bubble to burst or would it have happened anyway/

    Did W cause the 2008 bubble or were the market forces at work going to cause it no matter what?

    Clearly the Obama economic team pulled us out of the crash, but did his policies turn the market around or was it just going to happen?

    Net: do presidents really have that much effect on the economy or do other economic forces really govern, independent of the president’s decisions.

    If you do the same analysis by who was controlling congress, whether it is divided or not, show a trend?

    Provocative analysis that raises more questions than it answers. It could lead to a very interesting analysis, the results which would be debated endlessly.

    Thanks for sharing, Gary. What do you think?

    >

  2. JPorter631@aol.com says:

    Larry, the most important thing FDR gave was HOPE and he gave people the idea that he cared, e.g. Fire side chats. Book club just read a book on the period. Don’t discount the above. John In a message dated 12/17/2016 7:14:16 P.M. Pacific Standard Time, lwagner@mcn.org writes:

    Great analysis, Gary. Really makes me think – which is a dangerous thing.

    Another way of looking at it is how many times was the market up or market down by party:

    With 8 Democratic presidents the market was up 8 times, down once and flat once. With the eleven Republican presidents it was up 7 times and down 4 times.

    Does that mean the Democratic presidents are better for the market than Republican? Perhaps.

    But, when you look at the details, was Hoover responsible for the Depression or did it just happen to occur on his watch and would have happened not matter who was president.

    Did FDR pull us out of the Depression or did WWII? Where was the market level in 1941?

    Did Clinton cause the dotcom bubble or just benefit from it? Did Bush cause the bubble to burst or would it have happened anyway/

    Did W cause the 2008 bubble or were the market forces at work going to cause it no matter what?

    Clearly the Obama economic team pulled us out of the crash, but did his policies turn the market around or was it just going to happen?

    Net: do presidents really have that much effect on the economy or do other economic forces really govern, independent of the president’s decisions.

    If you do the same analysis by who was controlling congress, whether it is divided or not, show a trend?

    Provocative analysis that raises more questions than it answers. It could lead to a very interesting analysis, the results which would be debated endlessly.

    Thanks for sharing, Gary. What do you think?

    On Dec 17, 2016, at 3:28 PM, Global Macro Monitor

  3. macromon says:

    Thanks for your replies, Socratics. Larry, I updated the data and the relative return is even greater for the Dems. 92.17% v 44.85%. I found a bug in the program that did not include TR and Taft in the average. Many different ways to explain the differentials, but the margin is so wide the facts speak for themselves. Hoover’s reluctance to use the Federal Govt and the Fed’s failure to stabilize banking system led to Great Depression. You are correct though, the President’s influence on market is fleeting, at best. Unless of course, all confidence is lost in the regime.

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