US Companies Have Doubled the Dow Jones Industrials Index Increase During the Obama Presidency

I hear so many Democrats, Independents, and even some Republicans, praise President Obama on the US economy by citing the fact that the Dow Jones Industrial Index Average has increased by a very robust 61% during his Presidency.

The Dow Jones Industrials Index has increased from a closing price of 8,281.22 on January 16, 2009, the last day common stocks traded before President Obama took office, to a closing price of 13,343.51 on last Friday, October 19, 2012.

And I agree.  That is indeed a truly remarkable increase.

But the S&P 500 Index has done even better, increasing by 69% during the Obama Presidency. 

And that’s a very good thing for the US economy.  Why?  Because the S&P 500 Index has 500 companies in it, whereas the Dow Industrials Index only has 30 companies in it.  I would much rather see 500 companies do better than 30 companies, and particularly so if the 500 Companies are on average much smaller than the 30 Dow giants.

But still, we need to find out how companies smaller than the S&P 500 Index have done.   

Well, we can do this.  There is another S&P Stock Index called the S&P 400 MidCap Index, which tracks stocks smaller than those in the S&P 500 Index.

OK, so now we can get somewhere.  We now will be able to see how a broader swathe of US companies have done since President Obama took office.

Well, believe it or not, the S&P 400 MidCap Index has increased by a massive 91% since President Obama took office.  It went from 516.75 on January 16, 2009 to closing at 987.40 on last Friday, October 19, 2012.

Wow, now that tells me something.  So many progressives contend that the companies benefiting by far the most from the Obama Presidency are the mega giants.  Not true.  I’ll take a 91% increase over a 61% Dow increase any day.  The much smaller S&P 400 MidCap companies are performing on average roughly 50% better in stock price than the 30 Dow giants during the Obama Presidency.

Ok, that’s cool.  Can we find out how even smaller companies are doing?   

Well, there’s another S&P Stock Index called the S&P 600 SmallCap Index.  The problem is that I can’t find out how this Index has done during the entire Obama Presidency because I can’t find what this Index was trading for on January, 16, 2009.  I don't think it was available then.

But from the excellent Big Charts website, I can find the S&P 600 SmallCap Index starting on June 11, 2011.  And guess what?  The S&P 600 SmallCap Index has outperformed its much larger S&P 400 MidCap Index brethren from June 11, 2011 to October 19, 2012.  During this time frame, the S&P 400 MidCap Index is up 6.0%, going from 931.20 to 987.40, whereas the S&P 600 SmallCap Index is up 9.1%, going from 418.90 to 457.20.....and yeah, that means that the improvement in the S&P 600 SmallCap Index is more than 50% higher during this short time frame than the improvement in the larger S&P 400 MidCap Index.

OK, so that’s really cool.

But I am still troubled by all the stock market price research I have done on companies in all the individual US States.  My numbers are on average even substantially higher than the 91% growth of the S&P 400 MidCap Index during the Obama Administration.  I haven’t done the exact computation yet, but my hunch is that my average stock price increase for all the US companies I examined, and it’s much more than 1,000 companies, is somewhere in the 125% to 150% range.  And yeah, that means more than a Doubling of the Dow Index increase of 61% during the Obama Presidency.  So, what’s with that?

Well, it is a really good thing.  What you want is for all US companies to do as well as possible.  My average stock market gains clearly show that they are. 

So, what’s different with my approach?

Well, my approach is an Equal-Weight approach, consistent with the US concept of fairness.  My approach treats each US company the same…..just like one vote for each person does.

The Dow and the S&P Stock Indices weight performance based on company size.  Thus, a massive company like Exxon Mobil has a substantially higher weighting in these indices.  And this Exxon Mobil weighting is even a higher percentage weighting in the Dow Industrials Index than it is in the various S&P Indices, since there are only 30 companies in the Dow Industrials Index.

And Exxon Mobil’s stock price performance has been a real drag on these Indices during the Obama Presidency.  During Obama’s Presidential term, Exxon Mobil’s stock price has increased by only 18%, which drags down the overall 61% increase in the Dow Industrials Index.

In all fairness, if you want to evaluate how US companies overall have performed during a Presidential term, then I think that clearly my Equal-Weighting approach is the optimal measure.

So, all of the above stock indices show that US companies have substantially improved during the Obama Presidency, and this improvement gets much better as the size of the company declines.

And the optimally fair Equal-Weight approach shows that this improvement has clearly been off-the-charts during the Obama Presidency.