The Capitalist Investor - Episode 59

There have been 23 presidents since the inception of the stock market, starting with Benjamin Harrison (who was president from 1889-1893). Who are some clear winners? Who are the clear losers? Why? In this episode of The Capitalist Investor, we are going to judge presidents based on their stock market performance throughout their presidency. We will share the four worst and the four best—and what we think impacted their performance.

Outline of This Episode

  • [2:08] Let’s judge the presidents
  • [3:53] Herbert Hoover
  • [5:20] George W. Bush
  • [8:48] Grover Cleveland
  • [9:56] Richard Nixon
  • [11:43] Donald Trump
  • [13:35] Barack Obama
  • [14:59] Bill Clinton
  • [18:10] Calvin Coolidge
  • [20:06] The bottom line is…

The four worst stock market performances

Herbert Hoover’s market performance was a dismal -30% per year, but he was also president during the great depression. Talk about bad timing. He took over in March of 1929 and the market crashed in August. He didn’t help the situation at all when he wrote the Smoot-Hawley Tariff Act into law, which added more tariffs into an already bad situation.

George W. Bush took office at the peak of the tech bubble, then left in the depths of the great financial crisis, which might be the worst recession we’ll see in our lifetime. The average annual return during his presidency was -30.8%. It doesn’t get much worse than that. He was down 5.6% per year. He has an expensive and controversial war on his record as well. 9/11 hit while he was in office. It was a tough 8 years.

Grover Cleveland was president from 1893-1897. He had to deal with the panic of 1893, where the banking system collapsed—the catalyst of the great depression. He was down 4.9% per year in his first term.

People think Richard Nixon was the most intelligent president—but also the sneakiest. His market returns were down 3.9% per year. People remember Watergate, but what really hurt him was the removal of the gold standard, which led to crazy inflation.

The four best stock market performances

Donald Trump had an annualized return of 13.7% per year. Not too shabby considering where he started from. Average annualized returns look great when you take over at the bottom of a bear market. It is much harder when you take over when the market is at all-time highs—which is exactly what Trump did. Experts were saying that there was no room to go up. Look what happened.

Barack Obama saw an annualized return of 13.8% per year starting from January 2009 (at which point the S&P 500 had been cut in half). He took that through January 2017, the longest bull market in the history of the country. It was great timing for him.

Bill Clinton was president from January 1993 through January of 2001. He achieved 15.2% stock market returns per year. The stock market was on fire because of companies like America Online, a mind blowing technology that has become a game-changer.

Calvin Coolidge had great timing. Calvin was president from 1923–1919 and had an annualized rate of return of 26.2% per year. He took a modest hands-off approach to government. But he also left before the world fell apart.

It all comes down to timing

The bottom line? It all comes down to timing. Trump tied himself to a sky-high stock market valuation. Returns should have been below average for his presidency—but they weren’t. Everyone else had the good fortune of being in the office at the right time.

Barack Obama came in 3rd place, but his return should have been higher and more growth should have been realized. He took over at the depths of the worst recession we’ve seen. You can’t completely judge the quality of a president based on their stock market return, but it is one factor.

Resources & People Mentioned

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Episode 46:
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