Presidential Starts: 1900-2009 21 comments
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While there are any number of polls that are taken to measure public opinion of a specific event or policy, for investors, the ultimate gauge of opinion on anything is the performance of the market. With that in mind, there has been a lot of talk regarding the performance of the Dow Jones (DJIA) so far during President Obama's term. Upon his election, many in the media and on Obama's staff said that his election would bring about a new sense of hope in the American psyche, much in the same way that other democratic heavyweights such as FDR and JFK improved sentiment in America. However, based (rightly or wrongly) on the stock market's return so far, this new sense of hope has yet to bear out.
From the time President Obama was elected to his inauguration, the DJIA put in its worst performance over all election to inauguration periods since 1900, with a decline of 17.4%. And on the day President Obama was sworn in, the DJIA put in its worst ever inauguration day performance with a decline of 4%. Since then, things haven't gotten much better. Not including the inauguration day decline, the DJIA has dropped an additional 14.92% since President Obama was sworn in. Over the last two weeks, these declines have intensified with losses in ten out of the last twelve trading days.
Critics of President Obama have used these statistics as ammunition against his policies, while his supporters have laid the blame on the issues that he inherited. Both the critics and supporters of the President have valid arguments. With the passage of time, however, President Obama's ownership of how the market unfolds (good or bad) becomes less debatable, and as it stands now, he is not off to a good start. Through yesterday's close, the DJIA's performance during President Obama's first 41 days in office is the worst of any President since at least 1900.
click to enlarge
The Administration has made it abuntantly clear that its main objective is to help make the lives of lower and middle class Americans better. While their objectives are to ultimately help the lower and middle class at the expense of the upper class, all classes of Americans own stocks either directly or indirectly through 401(k)s and pensions. As the market declines, all classes lose out, and it's important to remember that the "wealthiest" Americans tend to have the most diversification and access to the best investment advice. This can help to insulate them from market declines. While the DJIA lost 34% of its value in 2008, equity hedge funds lost less than half that amount. Less "wealthy" Americans, especially those with indirect ownership of stocks, tend to have less access to the best investment advice and/or have little or no choice in directing their investments. Some of the hardest hit Americans during this bear market have been middle class workers who for the last twenty years maxed out their 401(k) contributions under the belief that these funds would be there when they retired. Now they are looking at a future that is a lot less certain. Pro-market policies will go a lot further to help the middle class than a stimulus plan that puts an extra $13 a week in their pockets.
Like it or not, the DJIA's performance under President Obama will say a lot in determining whether or not his Presidency is a success or a failure. Some of the most highly regarded Presidents on a historical basis also oversaw large gains in the stock market, while some of the least popular Presidents such as Hoover, Nixon, and Bush II saw large declines while they were in office. Gerald Ford's tenure as President also started off on a bad note, when he took over after President Nixon's resignation. However, during his tenure the market turned around, and by the time he left office the Dow was up 23% over his term. While Obama said today that he is not 'worried about the day to day gyrations of the stock market,' the decline we have seen recently is anything but day to day or a gyration. It is a free fall. Mr. Obama's tenure has just started, and it's gotten off to a shaky start, but let's all hope that the market heads higher during his tenure so that all classes of Americans can benefit.
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Most of the blame for the DJIA's performance for the first two months of this year fall squarely on the housing bubble and credit crisis of earlier this decade.
Now, that's not to say that President Obama's first 100 days haven't been part of the cause for the drop. I think it's just too difficult to assign all of the market's peril or prosperity to neat four to eight year time periods.
This is no coincidence.
- James Cramer 3/3/2009
There is no consideration of Congressional control, variables like employment, trade balance, historical GDP etc... etc.
How can you determine the effect of Reagan's de-institutionalizing the mentally ill until decades later? How can Kennedy's Bay of Pigs incident 'really' be felt until years later? There are some immediate consequences to each incident, but the effects absolutely cannot and do not draw any logical conclusions about whether one party has an absolute bad or good dominate effect on our economy.
Republicans are allegedly fiscally conservative and for small government... Bush 2 grew government at a rate faster than the past two democrats, and he and his republican (and for a short term democrat) congress spent more than any other administration. If you look at it in a bubble, he's not a conservative republican. Democrats are 'supposed' to be pro-union and 'pro-working class', but Clinton pushed for and succeeded in passing NAFTA - probably one of the biggest blows to our transportation and manufacturing industries. He also pushed for welfare reform, which many consider to be a republican trait.
Bottom line - have fun with these 'statistics' - but I certainly wouldn't get all righteous about some isolated policies or actions. And I would never - never make investment decisions based upon this drivel.
" High and volatile interest rates are not very helpful to most businesses, but many banks seem to make out just fine when money is expensive. That at least is one interpretation of the industry's impressive third-quarter earnings reports. After a ho-hum second quarter, profits have perked up; and for 56 of the nation's largest commercial banks, earnings have climbed by a brisk 18.2% over the same period last year, one of the largest such gains of any major business sector in the economy.
The surge was by no means uniform, but it came, remarkably enough, amid signs of a slowing economy. Last week, for example, General Motors said it had lost a stunning $468 million during the third quarter. The Chase Manhattan Corp. of New York, however, reported a jump of 20.1% per share in third-quarter profits. Total quarterly earnings were $116.1 million, the highest in Chase's 182-year history. Bankers Trust and Chicago's Continental Illinois did almost as well, with respective increases of 15.6% and 16.4%. The biggest rise of all, 227%, was racked up by First Chicago Corp., which had suffered a severe profits squeeze during its third quarter one year ago.
By contrast, declines in actual earnings were reported by the nation's two largest banks, New York-based Citicorp (off 11.6%) and California's BankAmerica, which suffered a 33.3% drop in profits during the period. Fifth-ranked J.P. Morgan & Co. also slipped, with a decline of 26.7% from the year-earlier period.
In general, banks that specialize in consumer lending have suffered most under the high rates, while those that rely on commercial or corporate borrowers have profited handsomely. One reason is that consumer loans are typically made at interest rates that do not fluctuate. At times of rising interest rates, profits of banks are squeezed by their portfolios' low-yielding loans. Fixed-rate loans have helped to drag down profits at Bank-America, for example, which has some 1,100 branches spread throughout the nation's most populous state. On the other hand, the sky-high rates have devastated the corporate bond market, where major businesses traditionally turn for financing, and forced companies to try to scrape by on short-term credit from banks like Bankers Trust and Chase, which have aggressively sought corporate business. Nationwide, short-term commercial debt has risen by 26.1% in the past six months.
Local and regional banks have also done well. Typical are Houston's Allied Bancshares, which reported a 38% increase in third-quarter earnings, as well as Georgia's First Atlanta Corp., which expects at least a 40% increase for all of 1981. "
www.time.com/time/maga...
Well Obama was elected and the market sold off from 9600 to now.
Baby Boomers are done, lost their 401ks, parents can't put kids in college and houses won't sell even at half price. 7 more years of socialism and permanently indebting our younger generation.
Lets start the revolution now.
On Mar 03 03:28 PM Korby wrote:
> This is an interesting article, but I also think there's a significant
> lag between policy and performance.
>
> Most of the blame for the DJIA's performance for the first two months
> of this year fall squarely on the housing bubble and credit crisis
> of earlier this decade.
>
> Now, that's not to say that President Obama's first 100 days haven't
> been part of the cause for the drop. I think it's just too difficult
> to assign all of the market's peril or prosperity to neat four to
> eight year time periods.
To be fiar they should put the value of the dollar next to the growth. FDR devalued the dollar so much with his incessant printing tha by the time he ended in office it took 5 to buy what could be bought for 1 under Hoover.
So who cares if the DOWs up 200% if your dollar went back 500 percent.
Obama, Reid and Pelosi are wrecking this country and the dollar.
He should limit what lawyers make only.
There are many factors at work here. The market may be disappointed that Obama has not really "change" his tune for the benefit of our economy. For example, he could lighten up on drilling restrictions and reduce our $700 billion a year dependence on foreign oil over the next 10 years. The Alt.Energy push is all well and good but a long way from producing a meaningful amount of energy. He skipped Nuclear too. How many plants is China building?
Also, issuing HUGE amounts of debt is a big part of the problem. There was no restrain in the stimulus spending and now we learn more spending is on the way. Apparently he felt a very large and fragmented effort would work better then a smaller targeted one.
The homeowner bailout has community reinvestment act support written all over it. I would have preferred a broader mortgage interest rate reduction effort and a recognition that if you can't afford to own, you should rent.
There is so much work to do in our economy as well as foreign policy challenges that to tackle healthcare at this point, seems again a little unfocused. I walked away from his speech before congress with to thinking, nothing has changed. All he wants to do is "tax and spend". I actually took out a position late the week before thinking Obama could really ignite the market with his policy efforts. Needless to say, I sold the day the after his speech.
"Ronald Reagan will hear plenty of complaints about sky-high U.S. interest rates during his two days of economic summitry next week in Ottawa, where the heads of the world's seven leading non-Communist industrial powers will gather to confer on economic policy. Instead of declining, as Administration officials have been predicting, interest rates have continued to wobble uncertainly around 20%. Last week the cost of money again ratcheted upward slightly, pushing the benchmark prime interest rate that big commercial banks charge to 20.5%, or just a percentage point below the alltime peak reached last December.
A tight money policy and the resulting high U.S. interest rates are a key element in the Administration's fight against inflation. Though the nation's trading partners and allies have welcomed Washington's determination to slow the rise in prices, they have begun to complain about the tactic being employed. Foreign leaders do not like high American rates because they force other nations to push up their own interest rates accordingly, thereby slowing economic growth. Officials are particularly concerned about resulting rises in unemployment levels. Unlike the U.S., which has seldom had an unemployment level of less than 3%, many European nations have traditionally had jobless rates of about 1% or 2%. Thus the rise to current levels of 5% or more is not only economically jolting but socially disturbing as well. "
www.time.com/time/maga...
Some are so fatalistic.
Watch the market recovery - and then we'll see posturing to take 'credit'.
Wow.
The ignorance and hate on both sides is the fuel that prolongs the trough that we're enduring. I would say that ignorance is the dominate trait here.