The Bush Legacy Market Returns

We are about to end the Bush era with President-elect Obama's swearing in to office on January 20. Below is a look at how the 10 key GICS sectors performed during President Bush's time in office from 8 years ago to January 19.

Note that these returns are cumulative over the entire period.

Russell 3000 Index: -23.54%

• Consumer Discretionary -28.2%
• Consumer Staples 48.3%
• Energy 84.8%
• Financials -46.7%
• Health Care -12.8%
• Industrials -6.7%
• Materials 29.7%
• Telecom -42.2%
• Utilities 44.9%

To be fair, Bush inherited a recession when he first took office in 2001 after the telecom, media and technology (TMT) boom during the late 1990s, and several years of Bush's presidency (2003-2006) were relatively healthy for stock market returns.

Not surprisingly, energy and material stocks performed well over the duration of Bush's presidency, although with extremely high volatility, while financials, telecom and consumer discretionary stocks have been at the bottom of returns.

Defense stocks such as Lockheed Martin (LMT) and Raytheon (RTN) have generally performed very well with increased outlays to defense.

As for currencies, the dollar has clearly weakened over Bush's presidency, the euro has moved from 0.935 to current levels of 1.315, the yen has appreciated from 117.24 to 89.17 per dollar and, interestingly, the British pound is nearly unchanged from 1.4631 to 1.4606 during the eight year period.

In the coming days, I will be posting some of my thoughts on what we may be saying about Obama's influence on markets during his (first?) four years in office. I will include an analysis of what areas I think will likely perform well and which areas may be under more pressure during the period.

Comments

[Prudent Man...:]

It will be interesting to read what the author has to say regarding our first admitted Socialist President's effect on markets.

I, personally, don't have a clue except that markets are very adaptable and can go up or down in reaction to events. Unfortunately, the "discounting" ability of markets is pure sophistry.

Jan 18 11:10 AM

[LCACM:]

President Clinton initiated NAFTA and since then we have had a slippery US market, constantly sliding into recessions. So he is equally to blame for the current crisis, as he helped create the huge trade deficit that has made lower interest rates useless as far as igniting the economy is concerned. When a tire has a leak, all attempts to inflate the tire will fail until the leak is fixed. President Clinton had partly fixed the Budget leak(deficit) but he made a new leak (deficit) by introducing NAFT., Some of the President Clinton's administration officials who created the leak by supporting NAFTA are now in power, so it is unlikely that the leak can be fixed.

Jan 18 02:18 PM

[tginomorebush:]

And it will be interesting to read what historians have to say regarding our most conservative, right winged, worst president effect was on markets with his return to crawford .... Thank God Its No More Bush!


On Jan 18 11:10 AM PrudentMan, CFA wrote:

> It will be interesting to read what the author has to say regarding
> our first admitted Socialist President's effect on markets.
>
> I, personally, don't have a clue except that markets are very adaptable
> and can go up or down in reaction to events. Unfortunately, the "discounting"
> ability of markets is pure sophistry.

Jan 19 08:51 AM

[notsosmart:]

as an indepedent-worst pres.ever.not his fault.just dumb & chaney ran the show.

Jan 19 11:46 AM

[john s. gordon:]

if a socialist is a person with a social conscience, there will be a welcome change from bush 43 who had no social conscience,

this whole compassionate conservative thing was pure BS, or as they say in the southwest - oongah.
> jack

Jan 19 11:52 AM

[chistletoe:]

Interesting that Prudentman makes the unsubstantiated claim that
the next president has confessed to being a "socialist".
It makes me wonder if Prudentman can define what a socialist is,
or if he uses the word because he believes it is perjorative,
and he is simply prejudiced for one reason or another.

interesting because our last president has moved this country farther into socialism
than anyone would ever have thought imaginable even ten years ago.
While it was fascinating that it took a republican, Richard Nixon, to open the doors to communication and trade with red China,
it took another republican to initiate a process of nationalizing all the banks and financial houses of the country.

Jan 18 08:01 PM