On the Cusp of the 2020 Election, Here’s How the Stock Market Has Performed Under Donald Trump Compared to Barack Obama’s First 4 Years after being Elected. The Results Might Surprise You.
The morning after Donald Trump was elected President, liberal economist Paul Krugman penned an emotional op-ed in The New York Times claiming that the U.S. stock market would “never” recover from Trump’s surprise victory. Krugman was wrong, of course. Four years later, stock market results have been largely strong under Trump, despite the COVID-19 pandemic and accompanying market crash this February and March.
Krugman’s doom-and-gloom assertion was ill-advised, but somewhat understandable considering how badly stock market futures cratered the night of the election; at one point, Dow futures were down more than 800 points! But investors came to terms with a Trump White House much quicker than Krugman had forecast: stocks were actually up the first day of trading after the election. Despite this year’s unprecedented global uncertainty surrounding the coronavirus, and even with things like impeachment and the ups and downs of the trade war with China, the net stock market results have been positive since Trump was elected.
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A conservative-leaning friend of mine brought up Krugman’s wayward post-election assertion recently, scolding the economist for his obviously partisan bias in making such a bold claim in a publication as revered (at least by most) as The New York Times. So, in the name of balance – and keeping my own political leanings under full lock and key – I thought it might be interesting to compare Trump’s stock market results in the four years since he was elected (minus just a few trading days) to the same period after Barack Obama won his first election in November 2008. Again – this is after their respective election dates, not their inauguration dates the following January.
Here’s what I found in each of the three major U.S. stock market indexes:
Stock Market Results (first four years after election)
Dow Jones Industrial Average
Those are some strong results under both presidents. But stocks have been stronger since Trump was elected – particularly growth stocks, as reflected in the more than doubling of the Nasdaq.
As with everything in the stock market, however, context matters. President Obama was elected in the midst of the worst economic downturn America has seen since the Great Depression, and the market didn’t bottom until another four months after he was elected (less than two months after he was sworn in). Trump was elected amid almost universal U.S. growth: rising GDP, escalating home prices, and an unemployment rate (4.8%) that was less than half its late-2009 nadir (10%). So it’s far from an apples-to-apples comparison.
On the flip side, Obama didn’t have the worst global pandemic in a century to deal with.
Now, if you broke this down by each president’s first terms, the results change quite a bit; Obama actually beats Trump in all three indexes.
Regardless, the strong stock market performance since Trump’s election proves that the daily noise projecting Trump’s poisonous effect on stocks was not only overstated; it was simply incorrect.
Investors Ignoring Trump Drama
Wall Street has tuned out most of the drama surrounding Trump. The impeachment inquiry and the ongoing trade war with China have seemingly held stocks in check at times, but those events haven’t sent markets spiraling downward the way COVID-19 did, and the tariffs initially put a much bigger dent in Chinese stocks (and other emerging markets) than U.S. stocks.
In the aggregate, very little of Trump’s bluster has scared investors away. Whether his handling of the pandemic has made things worse for the country, economy and stock market is up for debate. But the bottom line is this: Wall Street doesn’t care about who’s president as much as we think it does.
So don’t invest based on who you think is going to win the election next week. Buy stocks that you like, especially when times are good. And for the most part, Donald Trump’s presidency has been good for investors.
Investment analyst and Chief Analyst of Cabot Wealth Daily, Chris Preston brings you all the latest from the investing world. Sign up to get updates and breaking news delivered FREE to your inbox. Get unlimited access to our library of complimentary investing reports.Sign up now!
*This post was originally published in 2017 and is periodically updated.