Examining President Biden's Claim to the Stock Market Rally Success

Amid the rising figures in the stock market, President Joe Biden has pointed out the significant growth that has taken place over the last 14 months. Indeed, the S&P 500 has reached a historic high, marking 5,000 for the first time, a substantial increase from its position three decades ago.

The strength of the United States on the global stage cannot be understated, with the U.S. dollar reigning supreme over other global currencies. The technological prowess of America is highlighted by giants such as Amazon, Apple, Google, Nvidia, Meta, Microsoft, and Tesla, which are close to surpassing the combined market value of all companies in any other nation besides China.

However, President Biden's celebration of the stock market performance may not tell the full story. Comparing the market gains during his leadership to those experienced under former President Donald Trump, it's clear that the growth is relatively modest. After factoring in inflation, real returns under Biden average around 8%, whereas during the same period under Trump, the S&P 500 had gained 36% in real terms. This discrepancy illustrates that the recent performance is not as remarkable when put into context with historical averages and previous administrations.

Moreover, speculation over the stock market's movement correlated with political events suggests that investors need to remain cognizant of potential economic policies and their implications. For instance, the Democratic agenda, should they secure victory in November, includes significant changes such as doubling the capital gains tax and imposing taxes on unrealized capital gains. Such policies could potentially impact stock market performance negatively.

It's essential for investors to remain informed and consider the broader economic landscape, including government policies, as they make investment decisions. President Biden's optimistic view of the stock market rally should therefore be balanced against these considerations and the undeniable importance of real gains post-inflation.

Stocks, Investing, Economy