Which Presidents Were Best for the Stock Market?

Joel Anderson |

It has long been the case that Presidents, for better or worse, wind up getting the blame or credit for economic performance during their administration. It’s not really all that fair. The ability of a President to actually affect real economic change at all is pretty limited, and even where it exists, it rarely would actually manifest itself during their actual administration. But try telling that to a bunch of angry, unemployed voters, right?

However, given that it is President’s Day (and that the markets being closed can make for a bit of a slow financial news day), I thought it might be fun to take a look at how the stock market performed during the administrations of Presidents who were in office after 1896, when the Dow Jones Industrial Average first came into being. Loathe as I am to ever use the Dow as a benchmark, the one thing the index does actually have going for it is its age.

So, using this handy Dow Jones return calculator on site DQYDJ.net (that’s an acronym for “don’t quit your day job,” I punched in the beginning and end points for every American President since William McKinley, and came up with the five Presidents whose administrations presided over eras of the strongest stock market performance. The benchmark I used was the annualized DJIA returns including dividends as A) total returns would unfairly punish and/or reward President for the length of time they occupied the Oval Office and B) because dividends, while difficult to track accurately for periods with less information available, are still an important portion of returns, particularly for the earlier years when dividends were much more common. So, without further ado…

Calvin Coolidge

Tenure: August 1923 to January 1929

Total DJIA Returns: 241.445%

Annualized with Dividends: 30.336%

The two Presidents who lead off both this list and our list of the five worst Presidents for the stock market pretty clearly illustrate why reading solid stock market returns as a sign of a successful presidency wouldn’t be a good idea. Coolidge, who finished the term of Warren G. Harding before winning his own term in 1924, oversaw the booming days of the 1920s. Of course, it was those wild, rule-free days of market manipulation and fraud that pretty well set up the stock market crash of 1929 and the Great Depression, but Coolidge was out of office before that, so it’s all on the ledger of poor Herbert Hoover.

William McKinley

Tenure: March 1897 to September 1901

Total DJIA Returns: 70.353%

Annualized with Dividends: 18.514%

McKinley’s time in office was cut short when he was assassinated six months into his second term by anarchist Leon Czolgosz, giving way to Theodore Roosevelt. While Teddy Roosevelt really came to define the era, McKinley’s time in office begins just after the start of the Dow Jones, and included the rapid growth of a Gilded Era when labor unions were suppressed, there was no minimum wage, and monopolies were allowed to operate with impunity. All told, that created a lot of stock market growth, and McKinley comes in second behind Coolidge. However, like Coolidge, all that growth in share prices came at a steep price for the American people.

Bill Clinton

Tenure: January 1993 to January 2001

Total DJIA Returns: 217.185%

Annualized with Dividends: 18.195%

Clinton oversaw one of the strongest and most sustained periods of economic growth in American history, driven by the rise of the internet and by an opening up of markets and free trade. This is made all the more impressive when you consider that by the time Clinton left office, the dot com bubble had already burst and led to a major pullback in markets. Many are quick to draw a pretty direct line from the opening up of financial markets in the 1990s and the housing crash of 2008, but there’s still a pretty big gap there, and this period also saw major growth in wages for average Americans in addition to stock returns.

Gerald Ford

Tenure: August 1974 to January 1977

Total DJIA Returns: 33.087%

Annualized with Dividends: 17.775%

I know, I’m surprised too. It’s unfortunate. Old Gerald doesn’t like math, so he likely won’t be able to appreciate this. Ford may actually be a major beneficiary of a very small sample size. The loss of market value under Nixon bounced back after Watergate closed out and Ford took the office. Then, Ford was only really in office long enough for the bump. By serving longer, he might have seen his administration stretch into the Stagflation and oil embargo that hampered Carter. Ford, however, shrewdly got defeated handily in 1976 and dodged that bullet.

Ronald Reagan

Tenure: January 1981 to January 1989

Total DJIA Returns: 33.087%

Annualized with Dividends: 17.775%

The sound you just heard was all of the conservatives reading this article breathing a sigh of relief. Yes, everyone, relax. Uncle Ronnie is among the Presidents who best served the stock markets. Say whatever else you want about Reganomics, the 1980s were a grand time to be in equities. Like Clinton, the stock market growth is all the more impressive when you consider that the major pullback is also on Reagan’s watch. Despite seeing the savings and loan crisis and the crash in 1987 both fall within his time in the Oval Office, the Old Gipper still slips onto this list at number five.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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