Trump’s Stock Market Rally?

September 29, 2017
By Bob Dreizler

Yes, the stock market has gone up by 9%* during Donald Trump’s first six months in office. In a recent tweet, he seemed to take personal credit for this occurrence.

What he didn’t tell you was that during the prior six months, when Barack Obama was president, the S&P went up by —-9%. In fact, the S&P climbed from 805 to 2271 between Obama’s and Trump’s Inauguration Days. That’s a 182% gain or a 22.8% average annual increase. Of course, Obama took office after a stock market crash caused by the bank/credit crisis that happened during the anti-regulation Bush years. Since then, we have experienced the second longest bull (up) market in history.

A year ago, during his first debate against Hillary Clinton, candidate Donald Trump described the stock market rally as, “a big, fat, ugly bubble.” Throughout the campaign, Trump talked about how Awful the economy was, but now things are Great. Generally, Presidents deserve less credit or blame for stock market performance that they receive.

Of course, the economy and the stock market are not the same. Only a portion of Americans benefit greatly from the stock market’s growth. One troubling statistic has continued for decades: stagnant real wage growth. This is a factor that probably improves stock market performance, but this is not a comfort for those who depend on wages rather than dividends.

The stock market is a composite of individual company stocks. The stock price of Micro Dude Hats rises if they achieve a technological breakthrough. Miraculous Pharmaceuticals price drops if its groin ointment starts causing some very unpleasant side effects.

The unemployment rate is another measure of economic growth. Obama came into office during an economic meltdown. The national unemployment rate was 7.8% then, and rose to 10% by October, 2009. In January of this year, it was down to 4.9%, and recently dropped to 4.3%, the lowest in 16 years. Trump bragged about this, too.

It always makes me nervous when the market climbs steadily. Corrections are normal and the market has had only a couple of minor corrections since 2018. There are plenty of reasons to be nervous: North Korea, Climate Change-related disasters, President Trump, and more. There have always been reasons to be nervous, and a correction is long overdue, but no one knows when it will happen and how big it will be. Despite President Trump’s unstable and inconsistent leadership, it is rarely a good strategy to invest based or not to invest on political issues alone.

*As measured by the Standard and Poor’s 500. Statistics from Yahoo! Finance.