It’s official: Trump is the stock market king.
In fact, Trump has added so much value to the markets that he’s nearly added more since Election Day 2016 than Obama added in his eight years as president prior. Not long after Obama took office, the Dow Jones Industrial Average bottomed out at 7,000, and then peaked around 18,000, for 11,000 points added. I stopped my measurement of performance under Obama in November 2016, since that’s where I begin Trump’s.
Trump, meanwhile, in just over a year since the election, has added nearly 8,000 points. In other words, he’s added over 70 percent of the points Obama added to the markets in 1/8th the time.
Take a look for yourself. I had the chart go back to the mid-1980s so you have some perspective on how massive this recent run up is.
Now, here it’s important to differentiate between points added and percent added. “Percentage gain” in the market is often more useful in comparing presidents across different decade. Technically speaking, Obama nearly tripped the markets, because of the gain from 7,000 points to 18,000.
But did he really? No – because you only would’ve realized those gains if you invested at the market’s absolute low point during Obama’s presidency. In fact, where we begin our measurements make a massive difference. For instance, it’s much easier to look impressive in terms of “percent gained” when you’re coming back from a loss.
Take a look at the Dow Jones Chart, and you’ll notice that the markets peaked around 14,000 before losing half their value from the financial crisis. In other words, Obama only added 4,000 points, or 28.5% to their prior peak. Trump, meanwhile, took office during a peak – and added an historic amount since then.
According to CNBC,
The Dow has surged more than 31 percent since Trump’s inauguration on Jan. 20, 2017. That marks the index’s best performance during a president’s first year since Roosevelt. The Dow skyrocketed 96.5 percent during Roosevelt’s first year in office.
“This is all about policy,” said Bruce Bittles, chief investment strategist at Baird. “You’ve got lower taxes, less regulation and confidence in the economy is high. Things are firing on all cylinders.”
Trump quickly moved to cut regulations enacted by previous administrations. He also successfully pushed to overhaul the U.S. tax code. That revamp included slashing the corporate tax rate to 21 percent from 35 percent.
While FDR did technically nearly double the markets his first year, you have to remember that he took office right after the Dow Jones lost an insane 90 percent of its value. Imagine for instance you’re gambling at a poker table, and lose $90 of the $100 you started with. You decide to let me take over, and I come back with great news: I doubled your money! You think, “Great! I started with $100 and now have $200” – only for me to hand you $20.
Yes, technically that is “doubling” – and that’s the sense in which FDR (and similarly, Obama) doubled the market.
While it goes without saying that past performance isn’t indicative of future results, the markets have rallied on the prospect of tax reform and regulatory cuts that have since been realized. Unless the markets collectively decide that tax cuts and low regulation are a bad thing all of a sudden, I don’t see this rally going anywhere but up.
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