17 September 2008

Dow Down For Bush Presidency

The Dow closed today at 10,609.66. finishing not far off its lows of the session. It has fallen more than 25 percent since reaching a record close of 14,164.53 on Oct. 9 last year.

The Dow when President Bush took office (January 20, 2001) was 10,732.

The Dow has fallen 122.34 points (a bit more than 1%) in the seven years, seven months, and four weeks since President Bush took office.

When Bush took office the exchange rates with the U.S. dollar and the following currencies were (compared to their current values in parenthesis)

Canadian Dollar 1.5072 (1.0788) Down 28%
Euro 0.9374 (1.4215) Down 34%
British Pound 1.465 (1.7855) Down 18%
Yen 116.44 (109.71) Down 6%

Consumer Price Index (CPI-U) January 2001 175.1; August 2008 219.086; Inflation 25.1%

Thus, the inflation adjusted return on the stock market is about -26% during the Bush Presidency. The slide of the U.S. dollar against major foreign currencies confirms the slide in its value during the Bush Presidency.

Dividend yields as a percentage of share price have been in the 1% per annum to 2% per annum rate for the S&P 500 during the Bush Administration. Dividend yield were higher every single year from 1871-1997, although they bottomed out at 1.1% in August 2000, shortly before Bush was elected.

Total dividend yields during the Bush Presidency have been less than the amount that share prices have lost due to inflation, even before accounting for income taxes on dividend income.

Thus, even when considering total real return, rather than merely nominal stock index change, the stock market has been a losing proposition during the Bush Administration.

1 comment:

Anonymous said...

Bloomberg.com: U.S. Stocks Rally Most in Six Years on Plan to Shore Up Banks

The Dow closed at 11,019.69 today.

Let's see how long it lasts.