In March 2009, the U.S. stock market finished suffering some of its worst losses in American history. The Dow Jones had lost 54% since its October 2007 high, and two months previously, the country inaugurated Barack Obama as its new President. Since then, the stock market has more than double in value.
For some strange reason, there are people who are refusing to invest any money in the stock market, because they do not like the current President. For 4 ½ years, they stuffed their money in the proverbial mattress, and done nothing. I even came across one individual, who said, “I’m not doing anything as long as that man (Obama) is in office.” Finally, I know one man who says that he has been in cash for five years because he does not trust the current government. To say the least, his $100,000 has not grown much since 2009.
This is not an essay to attack or defend our president. It merely shows that those who have refused to invest in the stock market have done so to their own detriment.
Since January 2009, the S&P 500, with reinvested dividends, has averaged an inflation adjusted 15.4% per annum. This is more than twice the inflation adjusted return of 6.7% since 1873. Remember the gentleman who kept his $100,000 in cash? If he had fully invested his IRA in an indexed mutual fund, he would have over $200,000.
The link to the table below shows the average annual inflation adjusted return per presidential quadrennial. One can make their own judgments.
Essentially, if one chooses to stay out of the market because of who is in office, he would only be right six out 35 times. During this particular President’s time in office, it appears that politicizing one’s portfolio is a costly mistake.