If Donald Trump is lucky, he may never be faced with a market crash as gruesome as the one that welcomed President Barack Obama when he first took office in 2009.
Stocks, which already had plunged in 2008 in the wake of the financial crisis, continued to collapse in the first few weeks after Obama was inaugurated. The Dow plummeted 20% from mid-January to early March 2009.
But as anyone who follows stocks closely knows, the market bottomed in March 2009 and has been off to the races ever since.
With that in mind, it may be tough for stocks to enjoy nearly as explosive a rally under Trump in the next four (or eight) years as it has during Obama’s tenure.
The Dow has gone up more than 140% since Obama’s inauguration in January 2009.
If you look at how the Dow has done since it hit its low point on March 6, 2009, it’s up 210%.
If the Dow goes up 140% during the next eight years (yes, I am going to hypothetically assume that Trump winds up a two-term president for the purposes of this story) then it would be trading around 47,800.
And if it goes up 210%? The Dow would be at about 61,500.
61,500. That seems unimaginable, doesn’t it? Heck, 47,800 seems (say like Wallace Shawn in “The Princess Bride”) inconceivable!
But how did the Dow go from just around 6,450 at its low point eight years ago to the precipice of 20,000 today? Obama does deserve some, albeit not all, of the credit.
The $787 billion economic stimulus package approved by Congress just a month after Obama became president helped get the economy (and market) back on track.
However, the bank bailout (love it or hate it) that was put into place during the last few months of the George W. Bush administration also is largely responsible for stabilizing large banks, one of the primary culprits of the 2008 collapse.
Dow components JPMorgan Chase (JPM) and Goldman Sachs (GS) have skyrocketed since the bailout and are not far from their record highs.