31 December 2005

The Stock Market and Politics

A year ago the Dow* was at 10,783.01. It closed the year at 10,717.50, down 65.51 point. The market has still not regained its July 16, 1999 high of 11,209.84. Put another way, the stock market has been flat for the entire duration of the Bush Administration. If the stock market had been performing at its historical 7% rate of return throughout the Bush Presidency, the Dow would be comfortably north of 13,500 right now.

Bush can hardly blame Clinton for market performances in his second term, which are still flat. There are worse reasons to throw the bums out.

* The Dow is the most politically important market indicator, even if it is not necessarily the broadest or most representative indicator.

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