Index Portfolio Performance for the First Five Years of the Bush Administration
January 22, 2001 was the first day of trading after Mr. Bush became President. Three major indices stood at the following levels at the close of trading on that day:
Dow Jones Industrial Average: 10,578.24
Standard & Poor's 500: 1342.9
NASDAQ Composite: 2757.91
At the close of trading today, January 20, 2006, these same three averages stood at the following levels:
Dow Jones Industrial Average: 10,667.39
Standard & Poor's 500: 1,261.49
NASDAQ Composite: 2,247.70
If an investor were to have formed a portfolio based upon each of these three indices and managed each portfolio in terms of composition and balance to mirror the relevant index, the investor would have earned the following total nominal returns on investment:
Dow Jones Industrial Average: +0.84%
Standard & Poor's 500: 6.06%
NASDAQ Composite: 18.50%
Expressing these returns on an annualized (that is, "percentage return per year compounded") basis, the nominal results just presented are as following:
Dow Jones Industrial Average: +0.17% per year
Standard & Poor's 500: 1.24% per year
NASDAQ Composite: 4.01% per year
The above are nominal (that is, "not corrected for inflation") results. Taking into account the erosion of purchasing power (that is, "the effect of inflation") on portfolio value over the holding period requires adjusting the current portfolio value to its equivalent value on January 22, 2001. Using Bureau of Labor Statistics Consumer Price Index data for January 2001, when the CPI stood at 175.1, and for December 2005, when the CPI stood at 196.8, to adjust the current value of each portfolio to its January 2001 equivalent, the following real return on investment (that is, "annualized rate of return on investment adjusted for inflation") would have accrued to each portfolio:
Dow Jones Industrial Average: 2.15% per year
Standard & Poor's 500: 3.53% per year
NASDAQ Composite: 6.23% per year
In other words, an investor forming a portfolio tracking the Dow Jones Industrial Average from the beginning of the Bush Administration in January of 2001 would have suffered a loss in real value of the portfolio of more than two percent per year, which compounds to a loss in purchasing power of the portfolio over the term of the Bush Administration of 10.28%; the investor forming a portfolio tracking the Standard & Poor's 500 over that period would have suffered a loss in real value of the portfolio of more than three and a half percent percent per year, which compounds to a loss in purchasing power of the portfolio over the term of the Bush Administration of 16.43%; and the investor forming a portfolio tracking the NASDAQ Composite index over that period would have suffered a loss in real value of the portfolio of close to six and a quarter percent per year, which compounds to a loss in purchasing power of the portfolio over the term of the Bush Administration of 27.50%.
From a well-balanced portfolio of the common stock of reasonably low-risk, very large public corporations to an equally well-balance portfolio of the common stock of relatively riskier, small-cap public corporations, equity (that is, "stock") has offered significantly negative real returns over the tenure of absolute Republican control of the Legislative and Executive Branches of the federal government. This is the objective assessment of the stock markets of the United States and reflects a number of shares traded in the quadrillions and value transferred in the process of far more.
Whatever representations the Bush Administration can make concerning the success of its economic policies, and despite the sustained, corrosive, and concerted effort of the Federal Reserve to support this Administration through what it described as "accommodative" monetary policy, by any rational standard the results herein set forth paint a broad and scathing picture of an Administration, a political party, and an entire program of economic policies that have been no less than disastrous on the equities markets and the hundreds of millions of people both here and abroad who rely upon those markets to accumulate value both in nominal and in real terms.
The Dark Wraith leaves to the American voters judgment of the malfeasant stewards of this fiasco: the Electorate may yet decide finally and resolutely that bluster and venom are no replacement at all for intelligence and responsibility.