President Joe Biden is boasting about the recent stock market rally. He’s right that stocks have been on a tear for the last 14 months. The S&P 500 hit 5,000 for the first time in history. That’s up from 500 some 30 years ago.
Even with all our problems, the United States is the unrivaled alpha male nation. The dollar is the only currency that matters globally (the Euro and BRICS are weak little sisters), and for the first time, the U.S. economy produces far more than all of socialist Europe combined. Our Magnificent Seven technology firms — Amazon, Apple, Google, Nvidia, Meta, Microsoft and Tesla — are close to being worth more than all of the stocks combined in any other country, with the exception of China.
But the Biden bull stock market story isn’t all it’s cracked up to be. Most of the gains in the market have only made up for the miserable returns in Biden’s disastrous first two years in office when stocks lost almost 15% of their value. In other words, for the most part, the last 14 months have simply made up for the lost ground during the 2022 rout in stocks.
Yes, it’s true that in nominal terms stocks are at record highs. But one of the first rules of investing is that you need to pay attention to your after-inflation profits. If you make an investment in a widget company and in 10 years that stock has doubled in value but the price level in dollars of everything else has doubled, sorry, you’re no better off based on what you can buy with those profits.
So, let’s see what has happened to stocks over the first three years of the Biden presidency — i.e, through the end of January 2024.
Over that period, the price level has risen by about 18%. The real (inflation-adjusted) rate of return in the S&P 500 after three years of Biden is thus only 8%. This is fairly anemic and well below the average annual real rate of return since the New York Stock Exchange opened its doors, which is a three-year average of more than 20%.
Biden’s performance is also much worse than the bull market under Donald Trump. The S&P was up 36% in real terms at this time of Trump’s presidency, or more than four times better.
Trump has made the case that the rise in the stock market in recent months is a result of the higher likelihood that he will be elected in November. I don’t put too much stock in that claim. If the stock market tanks, is he responsible for that, too?
However, an analysis by ace investor Scott Bessent and a member of the Committee to Unleash Prosperity economic council finds that fluctuations in the stock market over the past year HAVE correlated positively with the betting market odds that Trump will win. Right now, he stands at just above 50%. This relationship could be spurious, and of course, by far the biggest factor that drives stock valuations is profits.
One last piece of investment advice: Investors should pay attention to the Democratic agenda if they win in November. The Biden economic plan calls for doubling the capital gains tax, taxing unrealized capital gains and raising both the corporate tax rate and the dividend tax. That is very bad news for sure for stocks. And THAT, you can take to the bank.
Stephen Moore is a senior fellow with the Heritage Foundation and a co-founder of the Committee to Unleash Prosperity. He is co-author of the book “Trumponomics.”
COPYRIGHT 2024 CREATORS.COM
The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.
First off, the companies listed on the stock market rise or fall depending on how effectively they navigate the economic environment they have to operate in. Companies that rise tend to have better earnings due to their specific products or services and how well they navigate the various markets they sell to. The United States is becoming a much less business friendly environment, because the Democrats always believe in over-regulation, excessive taxation and punitive government actions to force societal changes on both companies and the population as a whole.
In the last 3 1/2 years, the Biden administration has in essence declared that it wants to emulate the anti-growth business environment that exists in the EU. Stop economic growth and become a pure regulatory state that micro-manages all aspects of the economy and society. This of course forces businesses to revise long-term investments here in the United States and consider moving some or most of the manufacturing or supply chain outside the United States. This costs U.S. jobs. This also costs tax revenue, as companies will go to where they are treated best or at better than here. Same holds true as to why people move from NY to Florida or from California to Texas. Same basic economic drivers. Thus, Biden saying he wants to let the Trump tax cuts expire and saddle the American public with a $6 trillion dollar tax hike to pay for his elevated spending rates.
The market averages are up today largely because a handful of companies are driving earnings growth. When you dig into the details of the market performance, this is clearly visible. Their products or services are in heavy demand world-wide, and they have diversified their locations around the world, so they are highly profitable and at least partially shielded from the most detrimental aspects of the last 3 1/2 years of “Bidenomics”. Very large investors are also taking a view that should Trump be allowed to win the 2024 election (be able to overcome the Democrat cheating), the business climate in the United States and elsewhere in the world be much more favorable over the next 4 years.
The dems let us citizens keep our money? That is against all things dems stand for. I am still not back with my investment where I was in 2020 under Trump. I am bleeding money every day with the inflation. We retirees can’t replenish that loss with earnings from a job. What I gained under Trump I lost and still is not even back to that level let stand it increased. So much for Bidenomics or robust stock market ole Joe. You showed your dementia with that statement. Everything you have touched has been a failure. And you cannot blame that on Trump, you are the president, do you know that or hasn’t Jill told you that lately?
Joe doesn’t want to admit how bad his inflation really was and how badly it affected the middle and lower class citizenst!! But Joe also wants to take credit for things that he had nothing to do with, too!!! Like how many new jobs have actually been created by the Biden administration?? And what about all of the losses that companies are taking – like your electric vehicle mandates that failed seriously costing the auto makers a lot of money??
“….the average annual real rate of return since the New York Stock Exchange opened its doors, which is a three-year average of more than 20%.”
More than 20% ?? I would like to see the numbers that support that assertion.
Awesome! I’m so happy those with the capital to risk on stocks are doing so well. Maybe so well, Brandon can finally retire from politics? What the DOW us at really doesn’t mean jack to someone on a fixed retirement income that sees (maybe) a 2% COLA increase when Congress chooses…
“isn’t all it’s cracked up to be.” Hell, it’s a true depression sitting on the front porch. I can’t imagine why the market is allowing the lie to continue. I hate to break religious, but Satanism is the only possible explanation for the evolution of the most crooked political organization in US history. Founded to protect slavery, from that to battling against women voting, and still working to elliminate personal freedoms (outside of perversion), and now to the point of literally destroying America. Who’s gonna pay the bill? We’re already up to the point my great, great grandchildren will be shouldering the burden. Good God why do people vote for the demonic rats???
More like joey nobidens BULLSH*T MARKET.
Stop the war on petroleum products and we will see a real bull market.
It’s the Biden bullshi* market and every lefty is piddling down their legs with glee. I give Biden 0 credit for any good turn the market has shown given what his administration has done to the economy and the country. It’s an election year. Investment banks and big tech are mostly leftist leaches. Remember what the market did just after Biden was sworn in in ’21? It’s not as simple as that….is it? Lots of factors, to be sure, I recognize that, but it will be what it will be. The only recognition the Biden (family) administration gets is his ability to destroy this country, his corruption and his treason.
Finish your name “total”as in total idiot.
Not the Russell 2000. That is still well below its highs, not even accounting for inflation. Was at bear market price just a few months ago. Lets go Brandon!
I tend to look at the stock market from a personal view.
During the Trump years my IRA Portfolio reached its highest level ever and being retired I was drawing a monthly distribution. At its lowest point during the Biden economy I was down 22% off of that peak. Today, continuing to receive a monthly distribution, I am still down 17% from my highest level. I would need to grow my current portfolio another 21% just to reach the level I had under the Trump economy.
This portfolio was constructed to achieve moderate growth and to protect my nest egg. And over the years it has done that very well. Aa a precaution my advisor pulled money out of our stock portfolio and placed it in a competitive Money Market Account to cover the money we use for our monthly distributions. I expect that it will take time to make up for the heavy losses that occurred under the Biden economy and will grow rapidly again if Trump wins the election.
People don’t realize that it takes a larger percentage of growth to match your loss. In order for me to get back to highest dollar accumulation of the Trump economy, I would need to have a 28% increase in growth.
It is the greatest bullSH*T market in history!!
Sure the market is up, but I’m still down 20% from two years ago.
The stock markets like a roller coaster now it doesn’t go anywhere it keeps coming back to the same place. Let’s go Brandon.