MATCO MARKET INSIGHTS – IS MR. TRUMP THE STOCK MARKET PRESIDENT


 

President Trump has often bragged about how well the stock market has performed since he was elected. With the U.S. stock market recovering all its losses since its March lows and recently hitting a new all-time high, it's time to do some fact-checking, given that the U.S. Presidential election is less than 60 days away.

First, let's compare President Trump's stock market returns to those of the last five presidents. As shown below, under President Trump's first 45 months in office, the stock market has done better than under Presidents Bush Jr., Reagan, and Bush Sr. and in line with President Obama. However, President Clinton had better stock market returns during his first 45 months in office.  

Second, let's go back to 1948 and look at the average annual stock market returns by president. As shown in the table below, the average annual return under President Trump has been 12%, which is in line with President Obama but below many other presidents. Presidents Truman, Eisenhower, Reagan, Bush Sr., and Clinton were better for stock market investors. Thus, despite the political rhetoric, the facts clearly show that President Trump is not the stock market President.

Conventional wisdom is that a pro-business party, such as the Republicans, is better for the stock market. However, history has shown that since 1948, the stock market has performed better under a Democratic administration. The average annual U.S. stock market return under the Democrats has been 12%, versus 7% under the Republican Party.  

Will President Trump win re-election in November? Since 1948, each of the three times there was a recession in a presidential election year, the incumbent lost. This occurred in 1960, 1980, and 2008. Given the recent recession due to COVID-19, will history repeat itself? No one knows for sure, but in my next blog, we will examine what the experts predict on the election, and compare the different policies proposed by President Trump versus Senator Biden. So, stay tuned.  

The Bottom Line

As money managers, we cut through the hype from headlines and management teams that we meet. We focus on the hard facts and numbers when analyzing companies and building portfolios. Our proprietary M-Factor investment process analyzes each company from the perspective of Quality, Income, Growth, Value and Risk. Our Objective remains to invest in the best dividend-paying companies that provide long-term capital appreciation while minimizing risk for clients.

Anil Tahiliani, MBA, CFA
Vice President, Portfolio Manager

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