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John Dorfman

Stock market performance under Trump solid — so far

John Dorfman
| Monday, Oct. 30, 2017, 11:00 p.m.

Everyone is impressed with the performance of the stock market under President Trump — especially Trump.

Stocks have risen in nine of the first 10 months of the Trump administration, a record that no other president can match.

That goes back to President William McKinley in 1897; before 1896 there were no stock indices. To gauge performance, I used the Dow Jones Industrial Average for 1897-1927, and the Standard & Poor's 500 Index beginning with its inception in 1928.

While the market has consistently gained under Trump, the gains haven't been record-setting. From his inauguration on Jan. 20 through Oct. 27, the S&P 500 shows a 15.38 percent annualized rate of return. That's less than the annualized percentages achieved under five other presidents.

Harry Truman, Dwight Eisenhower, Gerald Ford, Bill Clinton and Barack Obama all did better over the course of their terms. The top returns were achieved under a pair of Democrats for whom Trump has expressed disdain — Clinton at a 17.49 percent total return per year and Obama at 16.25 percent.

Good and bad starts

In his first ten months, Trump holds the record for most up months, with nine. Close behind are William Howard Taft, Harry Truman, Lyndon Johnson and John Kennedy, each with eight.

This doesn't necessarily bode well. Taft's return during his full term was slightly negative. Johnson and Kennedy ended up with below-average stock market performance. Truman, however, ranks fourth for annualized return with 15.56 percent. All figures include reinvested dividends.

Franklin D. Roosevelt, Clinton and Obama also got off to good starts in the stock market, with seven up months in the first 10.

The worst start (by winning percentage) was in the Carter administration, with only two positive months in his first 10.

Peace dividend

Peacetime presidents have tended to do a bit better than wartime ones. Johnson and Richard Nixon presided over the Vietnam War. Neither excelled with regard to stock market performance, and Nixon (who had to cope with the Watergate scandal and the Arab oil embargo) had a negative return.

George W. Bush, president during the 9/11 terrorist attacks, also had a negative return, as the country struggled with how to respond to terrorism, and then with the beginning of the Great Recession.

The top three performers, Clinton, Obama and Ford, were all basically peacetime presidents.

On the other hand, the market under Roosevelt did well in wartime, rising 117 percent during the three years and nine months that America was fighting in World War II. However, a few Depression-tinged bad years, notably 1937, held down his overall return.

Party politics

It's apparent from even a casual inspection of the performance table that neither Democratic nor Republican administrations have a monopoly on wealth creation. Republicans occupy two of the top five spots, and also three of the bottom five.

Ned Davis Research Inc. studied returns on the Dow Jones Industrial Average since 1901 under Democratic and Republican presidents. Their conclusion: Stocks do better on average under Democrats (7.80 percent to 3.25 percent, on the basis of price only on the Dow, disregarding dividends).

The gap narrowed when inflation was taken into account. Real returns were 3.79 percent under Democrats and 1.03 percent under Republicans.

Looking at the party balance in Congress, the Dow industrials gained 7.97 percent when Republicans controlled both houses, gained 5.47 percent when the Democrats controlled both and lost 0.80 percent when Congress was split.


What does all this mean for the stock market outlook today? No one knows for sure because, as the Greek philosopher Heraclitus said, you can never step in the same river twice.

Based on history, the Republican congress is a plus, and a Republican president is a minus. In my view, Trump is short-tempered, impulsive and disorganized. Nonetheless, his stances in favor of taxes and against regulation are likely to favor corporate profits.

My best guess for 2018 is that the market will achieve high single-digit gains, but with more volatility than we have seen the past three years. I would guess we will come in a percentage point or two below the market's long-term average (since 1928) of 9.35 percent.

John Dorfman is chairman of Dorfman Value Investments LLC in Newton Upper Falls, Massachusetts, and a syndicated columnist. His firm or clients may own or trade securities discussed in this column. He can be reached at

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