If you bought shares of a low-cost stock index fund on the president’s first inauguration day on January 20, 2009, you would now have tripled your money. This according to New York Times columnist Jeff Sommer, who says the Obama years have seen a “splendid market.”
Sommer claims, however, that it isn’t talked about much by politicians. “The main reason,” he writes, “may simply be that the current bull market is suspect because it came after one of the worst declines in stock market history.” People were “fleeing the stock market,” writes Sommer, adding that many have never returned to enjoy the winnings.
Dow Jones Industrial Average data provided by Paul Hickey, co-founder of the Bespoke Investment Group, shows that since 1900 the Obama presidency has been the third best for investors with an 11.8% gain (annualized, without dividends). This has been beaten only twice: during the terms of Calvin Coolidge (in the 1920s) and Bill Clinton (from 1993 to early 2001).
Sommer claims there are two “obvious reasons for the market’s stellar performance in the Obama years.” The first is that the president inherited pretty dire market conditions, so “any signs of recovery were likely to result in a market rebound.” The second is that the Fed (which the president does not directly control) dropped short-term interest rates to near zero one month after the election.
Even though the rosy market has not been “as widely celebrated or appreciated as past bull markets have been,” Sommers argues that it may tip the election odds in favor of the incumbent. “The facts are inescapable,” he writes. “The Obama years have been among the best of times to be a stock investor, going all the way back to the dawn of the 20th century.”
