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.”
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Joe’s inane pronouncements and boasting are just another duck dodge to enable the dissemination of the financial lawlessness in their lies. Those who saw their retirement stock portfolios drop during the COVID pandemic which was nothing compared to the 2008 real estate (Everybody has a right to own a home so the socialist conquered government should back up the loans of bus drivers who buy $400,000 homes ) debacle. Any fool who gives Biden and the Democrats credit for their current stock portfolio recoveries back to the pre COVID levels should understand that their value debased dollars now in those portfolios will need about an extra $100,000 to buy that same $300,000 home you could have bought in 2018. Not only that, but raising the home interest rates from 2-3% up to 5-7% under Joe adds an additional $600-800 in interest on your monthly mortgage payment, and TRILLIONS more in interest paid to China loan repayments on our yearly national debt. Thanks to Joe and his socialist unequal redistributors of social and financial pain, that Margaret Thatcher statement about Socialism (Sooner or Later you do run out of other people’s money) is no longer decades away, but now in our face, close and up front for all who now see their American dream turned into a Biden living nightmare. Only the political crime families now live and get to take it to the bank, while the honest hardworking just continue to get buried in debt.
Even IF the market is booming, HOW DOES THAT benefit the NORMAL folk?