Saturday, November 4, 2017

Election Rallies

"Kid, you're on a roll. Enjoy it while it lasts, 'cause it never does."
--Lou Mannheim (Wall Street)

As we close in on the one year anniversary of arguably the most incredible presidential election in US history, Donald Trump reminds us almost daily about how high the stock market has lifted since election night. The S&P 500 is up about 21% in the last year.

However, that twelve month performance places the Trump election rally only fourth on the list since 1936. Clinton 1996 (32%), JFK 1960 (29%), and George H.W. Bush 1988 (23%) all rank higher.

One thing we can be sure of. All of these administrations, and their supporters, were prone to tout what they saw as the executive office's positive influence on markets. And you can bet that many of Trump's detractors who see higher stock market prices as completely unrelated to Trump were chatting up Bill Clinton's market magic during the era.

Taking credit for stock market gains is extremely bad mojo. From the above graph, the JFK and Bush rallies both fizzled in subsequent months. Clinton was fortunate enough to jump ship before the bust really got going.

Rest assured that the wrath of the trading gods will rain down upon Donald Trump's swagger as well. When the storm hits, this president, like his predecessors, will quickly move from owning market increases to disowning market declines.

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