Index Portfolio Performance During the Bush Administration to Date
On January 22, 2001, which was the first day of trading after George W. Bush became President of the United States, three major indices stood at the following levels:
Dow Jones Industrial Average: 10,578.24
Standard & Poor's 500: 1342.9
NASDAQ Composite: 2757.91
At the close of trading today, November 4, 2005, these same three averages stood at the following levels:
Dow Jones Industrial Average: 10,530.76
Standard & Poor's 500: 1220.14
NASDAQ Composite: 2169.43
If an investor were to have formed a portfolio based upon each of these three indices and managed each in terms of composition and balance to track the relevant index properly, the investor would have earned the following total returns on investment:
Dow Jones Industrial Average: 0.44%
Standard & Poor's 500: 9.14%
NASDAQ Composite: 21.34%
Expressing these returns on an annualized (that is, "percentage return per year compounded") basis, the results just presented are as follows:
Dow Jones Industrial Average: 0.09% per year
Standard & Poor's 500: 1.98% per year
NASDAQ Composite: 4.89% 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 the 58 months from Janaury 2001 through September 2005 and projecting the October 2005 contribution from the trend line of the preceding nine months (since the October figures have not yet been released by the BLS), 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: 2.81% per year
Standard & Poor's 500: 4.65% per year
NASDAQ Composite: 7.47% 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 an annualized loss in real value of the portfolio of almost three percent; the investor forming a portfolio tracking the Standard & Poor's 500 over that period would have experienced an annualized loss in real value of the portfolio of more than four and a half percent; and the investor forming a portfolio tracking the NASDAQ Composite index over that period would have experienced an annualized loss in real value of the portfolio of about seven and a half percent.
From a well-balanced portfolio of the common stock of reasonably low-risk, very large public corporations to an equally well-balanced portfolio of the common stock of relatively riskier, small-cap public corporations, equity (that is, "stock") has offered negative returns in both nominal and real terms over the tenure of absolute Republican control of the Legislative and Executive Branches of the federal government. Because no reasonable analyst could argue that securities markets have a political bias, the figures presented above offer an objective assessment of the effect of the neo-conservative agenda on both the national economy and on investors relying upon the stewardship of the country's leaders in their responsible role of ensuring an environment conducive to capital appreciation. To the extent that individuals and households rely upon that capital accumulation for future income security, the Republican era that has marked the beginning of the 21st Century has been a failure.
The Dark Wraith does, however, recognize that neo-conservatives would encourage investors to applaud the negative returns Republican policies have fostered.