When Obama took office, the Dow average was at 8281. It is now trading above 9950.
In comparison, during the last year of the Bush administration (after 7 years of his "economic" policies), the Dow dropped from 14000 to 8281.
Looks like the stock market favors Obama. I know my retirement funds do!
If you check the market trend you will see that the market took a huge drop after Obama won the primary election and it tanked after the November election.
He has done nothing since taking office that has had a positive effect on the stock market.
First, this rally is mostly about the financial sector. The U.S. government decided that, no matter what the cost to the citizen, the major banks had to be saved. Bank losses were transferred to public books and unprecedented funds were showered on the banks to keep them solvent. Bank borrowing costs were reduced to near zero and, for the first time, interest was paid on reserves held at the Fed. Many of these banks were designated as 'too big to fail,' so they became a nearly risk-free bet.
The result: bank profits skyrocketed. Just today, JP Morgan reported that profits surged sevenfold from the second to the third quarter of this year! In fact, over the past six months, stock performance of financial sector firms was 66% better than the S&P 500 as a whole.
Second, the rally is mostly inevitable bounce. In the third quarter of 2008, in the face of collapsing stock and commodity markets, investors piled into cash instruments such as Treasuries. However, once the crisis appeared to pass, the same investors fled these zero-return 'investments' back into corporate debt, and then equities. Such massive fund flows have provided the tide upon which the current rally is based.
Third, despite the fact that the economy is in recession and corporate earnings are falling, government officials have been furiously attempting to boost market sentiment. They have been strongly supported by Wall Street cheerleaders in the media, with statements such as "earnings came in ahead of estimates" and "we see recovery in the next quarter."
Finally, even shell-shocked private investors have been drawn into equities, seemingly desperate to make good their losses of the past year. Normally, such a surge in private investment would presage a fall in markets. All the while, despite extensive new government hiring, U.S. unemployment has risen to an official level of 9.8 percent, and retail sales have fallen. In fact, the real rate of unemployment has reached almost 20 percent!
Meanwhile, the U. S. dollar continues to plunge, taking a large bite out of the true gains made by the surging Dow. U.S. interest rates are likely to rise, making bond and stock markets increasingly dangerous. In other words, to the extent that the rally persists, it appears to be growing longer in the tooth. But can as much be said for similar rallies happening around the world?
And my gold just keeps on going up. Invest smart, gold is solid. My retirement is up 12% from last year at this time.
My own quote, "Our government stinks. It's official"
Invest smart, gold is solid. My retirement is up 12% from last year at this time.
Gold is trading at an all time high right now. So it is a good time to sell gold if you have it. Buying during a peak however, would be a very unwise investment. For the record, my 401K has increased more than 12% in the last 12 months.
