In studying the historical return of the stock market, there are few things more influential than the presidential administration in office at the time and their policies.
It’s not easy to find someone in presidential history to compare to our current leader, but one that may come close is Theodore Roosevelt.
Theodore Roosevelt was the twenty sixth President of the United States. He served as Vice President under William McKinley before McKinley was assassinated in September of 1901. He served without a Vice President and remained in office until 1909.
Roosevelt was a master of self promotion. He was a hero of the Spanish American War and that experience seemed to teach Roosevelt that every subsequent political and professional conflict should be charged with the drama and righteousness of this armed combat.For Roosevelt, losing the battle or being killed was preferable to missing the action entirely.
On September 7, 1901, the first day that the stock market could fully respond to McKinley’s shooting, the Dow Jones Industrial Average lost 4.4 percent, but as hopeful news of McKinley’s recovery was reported, it regained most of that loss. Only when it appeared that McKinley would not survive did stocks plunge again, losing nearly six percent in the three days before McKinley’s death. A similar plunge took place on election night in November, 2016 when it was becoming clear that Donald Trump would be the next President of the United States. Of course, the market regained all of that loss and then some before the next trading day was complete. Roosevelt assured party leaders that he intended to adhere to McKinley’s policies and he retained McKinley’s cabinet.
- Mark Twain once remarked that the President was ” clearly insane”.’
- There were many in the Republican party that considered Roosevelt to be a “madman” and cringed at the thought of him being in the most powerful office in the world.
- Roosevelt was against the power of large corporations and asked Congress to curb the power of large corporations, referred to as “trusts” at the time. Donald Trump made some remarks about Amazon (AMZN:NASDAQ) and their monopolistic potential before he was elected.
- Roosevelt endorsed the gold standard, protective tariffs and lower taxes.
- Roosevelt was the first President to issue over 1000 executive orders, which was almost as many as all of his predecessors combined. Members of Congress eventually got tired of Roosevelt excessive use of executive orders to create policy.
- Building on McKinley’s effective use of the press, Roosevelt made the White House the center of news every day.
So, how did the stock market perform under Roosevelt? The 1900’s saw an average annual return on the Dow Jones Industrial Average of 9.92%. It was a successful period but also a volatile one.
DISCLOSURE: This article was written for informational purposes only. It is not intended as investment advice and should not be relied upon as such. Consult with a qualified financial advisor or tax professional to determine the proper investment plan for you and your circumstances. I do not personally own or plan to purchase any investments spoken of here.
“A History of the United States in Five Crashes”, Scott Nations