For the past several months, US stocks whipsawed with each presidential tweet about whether Trump is adding tariffs or suspending tariffs, talking to the Chinese or ordering US companies out of China. We’ve seen some days where the Dow fell over 800 points, which once upon a time was a big deal, but amounts to a decline of only 3% in a year when the S&P 500 is up 20.6%. When the Dow fell 508 points in October 1987, that was a decline of 22.6% in a day!
Recently a client called with a very serious concern. He intends retire soon, is worried that Trump will drive the country into recession next year, and wanted us to put all his assets into bonds and cash.
I gently reminded him of the value of working with our firm – coaching you to ignore noise and focus on facts. Sure, the day to day fluctuations SEEM dramatic. However, since January 1st, 2018, US stocks are up 14.3%, which works out to an annualized gain of 8.3% over the last 7 quarters – right in line with long term averages. For curiosity, we ran a study calculating the total return of the last 7 presidents from Inauguration day through the equivalent of 9/6/2019, so approximately 700 trading days per president.
What we see is that stocks generally go up regardless of who the president is, regardless of politics, and probably would go up even if my dog was the president.