And guess what? The best first-term presidential market (at least so far) has come during the administration of . . . President Obama, who has been reviled on Wall Street for allegedly crippling corporate America with insults and regulation, and who has pushed through higher taxes on investment income of upper-echelon households. Yet stocks produced a whopping 95.9 percent total return from Obama’s inauguration through Fortune magazine’s mid-September press time.
Finding Obama at the top isn’t what I expected to see when I asked Wilshire to calculate returns by presidential administrations. We started with Ronald Reagan, because Wilshire didn’t begin tracking daily market returns with its Wilshire 5000 index until 1980. That’s why Reagan, who took office in 1981, is the first president on our list.
If George W. Bush, the investors’ supposed friend, produced the worst return of any president starting with Reagan, who showed the best return? No, not Reagan, beloved in some places (and notorious in others) for kicking off our orgy of tax cuts. It was Bill Clinton, who pushed through a hefty tax increase during his first term.
Think about it. Under two Democratic presidents, stocks have shown the best return, while three Republicans bring up the rear.
Tempting as it is to tweak my more conservative friends with this fact, it would be wrong to attribute the Clinton and Obama returns to their policies and presidencies. Clinton inherited a great economy (and no, I don’t attribute it to Reagan’s policies as supply-side types do, and neither should you) and left office after the Internet stock bubble burst, but well before it bottomed. Bush inherited a tanking stock market and left amid a financial panic. Does Clinton deserve full credit for everything good during his tenure? Does Bush deserve full blame for everything bad? Yes, if you’re an ideologue. No, if you’re intellectually honest.
Obama took office with stocks at really low levels, with which he had nothing to do. After a sickening two-month drop during which his critics tracked the “Obama market,” things stabilized, because of coordinated actions by central banks and governments throughout the world. The panic was alleviated, and the “Obama market” largely disappeared from public discourse.
About half the gain during Obama’s tenure came during his first year. By contrast, Reagan had a loss in his first year. Other year-by-year returns have varied. “There’s no pattern here — it’s just random,” said Bob Waid, managing director of Wilshire Analytics. “If these were causal relationships, you would see a different pattern.”
The bottom line: Go ahead, vote for whichever candidate you want. But don’t think that your guy’s winning — or losing — will determine what happens to the stock market. That’s just not how the world works.
Sloan is Fortune magazine’s senior editor at large. To read his previous columns, go to postbusiness.com.