What a difference a few months makes. As most investors were painfully aware, President Obama's first term in office certainly got off to a poor start. On his inauguration day, the DJIA declined 4%. This was the worst performance on the day of a Presidential inauguration since at least 1900. Things didn't get much better soon thereafter. Forty-one days into his presidency, the DJIA's performance was also the worst for any US President since 1900. To many, this was a sign that the market was not comfortable with his policies and their ultimate impact on business. Others argued that the declines were the result of the problems that Obama inherited. As we noted back in April, "Both the critics and supporters of the President have valid arguments. With the passage of time, however, President Obama's ownership of how the market unfolds (good or bad) becomes less debatable, and as it stands now, he is not off to a good start."
As time has passed and Obama's ownership of the economy has become less debatable, the market's performance has seen a major reversal. There is still a little more than a month left in his first year, but as of today, the DJIA's 32% gain is on pace to be the second best first year return for a US President since 1900. The only President with a better first year return was FDR who oversaw a gain for the DJIA of 96.1%. While there are many who argue that Obama's policies will hurt business and the economy, so far the market is saying that his critics are wrong.
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