The S&P 500 collapsed to 666 under Obama, worst president ever.
EDITORS' PICK67,402 viewsJan 17, 2017, 09:03am
Inside The Obama Stock Market's 235% Return
Nathan Vardi
Forbes Staff
Hedge Funds & Private Equity
Following the money trail
The big stock winners of the Obama years were a beauty store chain, a shopping mall owner, Netflix and consumer discretionary companies like Under Armour. The losers were companies linked to oil and gas as commodities prices plunged.
When Barack Obama was sworn in as the 44th president of the United States on January 20, 2009, the U.S. stock market was in free fall. The financial crisis was in full swing following the collapse of Lehman Brothers and the Standard & Poor?s 500 index, a popular measure of the U.S. stock market, closed at 805 points on Inauguration Day.
Eight years later, the S&P 500 index has risen to 2,274 points after one of the great bull runs in stock market history. With Obama as president, the U.S. stock market, as measured by the S&P 500, returned 235%, or 16.4% annualized.
The Obama stock market trounced the stock market of his presidential predecessor, George W. Bush, which fell 30.6% from January 20, 2001 to January 20, 2009. Bill Clinton?s stock market, however, beat the Obama stock market, returning 264%, or 17.5% annualized.
The top-performing sector of the Obama stock market was the consumer discretionary sector, which returned 338%, or 20% annualized, according to FactSet Research Systems. The sector was driven by hot stocks like Under Armour and L Brands. Energy stocks were the worst performers during the Obama years as the price of oil and other commodities plunged. But even the energy sector managed to stay in positive territory and eke out a 53% return during Obama?s presidency.
Both Silicon Valley and Wall Street did well under Obama. Information technology was the second-best performing sector of the U.S. stock market during the Obama presidency, returning 285%. And while bankers complained about being political targets and dealt with new regulations limiting their risk-taking activities, Wall Street recovered in the years after banks received bailouts. Financial stocks were the third-best performing sector in the U.S. stock market during the Obama years, rising 261%.
In Obama?s America, the top-performing stock according to FactSet was a chain of beauty stores known for discount deals and based in Bollingbrook, Ill. Ulta Salon, Cosmetics & Fragrance has staged a stunning expansion during Obama?s presidency and now operates 949 stores across America, selling 20,000 beauty products ranging from cosmetics to skin care and salon services. Ulta Salon?s stock has returned 4,350% during the Obama years.
Shortly after Obama took office, a group of Wall Street investors led by billionaire hedge fund manager Bill Ackman reorganized a bankrupt shopping mall owner while U.S. real estate was reeling. General Growth Properties filed America?s largest ever real estate bankruptcy. The recapitalized company took the stock market by storm, returning 3,465%.
The Obama years coincided with lightning-fast technological change that was reflected in the stock market. The iPhone was introduced less than two years before he took office. During the Obama years, billionaire Reed Hastings transformed Netflix from a DVD rental-by-mail company into a video-streaming behemoth that changed the way people consume entertainment. Shares of Netflix have returned 3,037% in the last eight years.
Another revolution that has taken place while Obama has been president involves biotechnology. New medicines and treatments have produced disease-curing breakthroughs, creating massive stock market value in the process. Billionaire Leonard Schleifer?s Regeneron developed a drug to treat eye disease age-related macular degeneration, Eylea, which produced $4.09 billion in 2015 sales. The drug was approved by the Food & Drug Administration during Obama?s first term and Regeneron?s stock has surged by 2,294% while Obama has been in office.
Obama has long been an advocate of renewable energy and has particularly promoted solar energy. With the Obama Administration providing solar subsidies, investors rushed into solar stocks, but they have largely been disappointed by the results as those subsidies faded. First Solar, the largest U.S. solar equipment producer, has seen its stock fall by 74% as prices for solar panels fell, making it the worst performing S&P 500 stock of the Obama years.
With oil and natural gas prices weakening in recent years, the three other stocks among the top four worst performers in the S&P 500 during the Obama years were energy companies. Shares of Southwest Energy, Transocean and Chesapeake Energy tumbled by 63%, 58%, and 41%, respectively, while Obama was president.
Still, of the main stock index?s 469 stocks that were trading when Obama took office and remain listed today, only 12 of them ended the Obama terms in negative total return territory. Some of those stocks, like Goldman Sachs, got an extra boost after Donald Trump was elected and the stock market staged a Trump rally. But in the history books, those gains will be attributed to the Obama stock market.
opcorn2
