The Stock Market and The Stable Genius
Donald Trump claims he has created the greatest economy ever, talking almost daily now about the growth of the stock market. Focusing ONLY on the Dow Jones average, I offer this simple rebuttal of Trump’s claims.
Under Barack Obama, the Dow grew from 8279.63 (1/19/09) to 19948.82 (1/17/17) just before Trump was inaugurated. That is a positive delta of 11,569.19 over 8 years, while digging out from the Great Recession. This averages out to 120 points positive per month. This is actually quite remarkable when we recognize where the country was when Obama took office: fear reigned on Wall Street-some banks had already gone out of business and others were failing. It actually took years of consistent and smart economic policy to rebuild investor confidence.
Under Trump, the Dow has grown from 19848.82 to today’s close of 25,766.64, a positive delta of 5917.82 in three plus years. This averages out to 160 points positive per month. No recession; only a tax cut for wealthy Americans who invest in the market. No lack of confidence here: investors have been bullish for years due-in great part-to the solid economy established by Obama and continued by Trump. With confidence in the market, and money in their accounts, the wealthy have made the most of this ride.
Now Trump would complain that the market-before this week’s mega-meltdown-was much higher. In fact, the market had grown to 29,348.10, which would have been a positive delta of 9499.28, or a 269 point growth per month: this is a stunning growth rate for investors. Again, no massive planet-wide recession: only tax cuts for the wealthy and corporations. And remember, this is the wealth growth of wealthy Americans: poor and middle-class Americans are not making money in the market. Where Obama invested heavily in rebuilding the middle-class with programs to save homes from foreclosure and jobs from extinction, Trump has focused solely on growing the wealth of the wealthy.
But there’s something more intriguing to consider than just the growth of the market itself.
The market has crashed this week due to fears about the unknown: it is ‘instability’ that leads to massive sell-offs like what we are seeing. And here’s the rub: over the course of the market’s entire history, the market has had nine of its top twenty greatest daily gains under Trump, growing 5845.22 points in those nine days alone. WOW, one might think. But also under Trump, the market has had twelve of its top twenty greatest daily losses, losing a total of 9765.36 points in those twelve days.
And that doesn’t count today, when the DOW dropped 1190.95 points, its greatest single daily drop-EVER. That means 13 of the top 20 drops in history have occurred under Trump, losing almost 11,000 points. In 13 days.
So while the market has grown under Trump, what investors are experiencing now is the most volatile market ever. And volatility does not make for a good investment environment. With all the money wealthy Americans and corporations got into the 2017 Tax Cuts, one might think the market would now be at 40,000. But it’s nowhere near that; in fact, it is currently in free-fall.
And all of this instability, and investor fear, is due to the ‘Stable Genius’ in the White House. The ‘Stable Genius’ who understands nothing about the economy, and even less about the market. The ‘Stable Genius’ who loves to take credit for the rise of the market, but never takes fault for its drops. The ‘Stable Genius’ who manipulates the markets with Tweets, leading to more instability.
Had we seen these types of market crashes under Obama, the wealthy would have gone mad. Yet, in the first year or so under Obama, while the market did drop considerably until his policies took effect, we never had this up-and-down instability we have today.
For those who want to keep Trump in the White House because he is helping them grow their wealth, it may be time to reconsider. The ‘Stable Genius’ has no idea how to make the market stable, and your wealth-and peace of mind-will have no stability while Trump is president.
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©Timothy J. Sabo