Elections have consequences. But the record shows those consequences are rarely what investors expect.
In March 2009, for example, conventional wisdom was a regulation-happy Obama administration would be pure poison for the stock market. Since then, the S&P 500 returned 218 percent, one of the most explosive compound annual returns in history at 17.8 percent.
The consensus outlook for the health care sector in early 2009 was worse still, as many worried about the incoming president’s push for comprehensive legislation. But the S&P 500 Health Care Index has done even better, generating a 264 percent return.
Compare that to the extremely dismal performance of solar-power stocks, an industry many expected to prosper under Obama because of focus on climate change issues. The MAC Global Solar Energy Index is now down 72 percent from the day the president took office.
Meanwhile, the Dow Jones Utilities Average has nearly doubled, mocking those who bet against the power sector on fears of tighter emissions rules and rooftop solar.
Certainly, Obama administration policies enormously affected where federal dollars were spent and increased regulations on many industries, particularly financial services. Yet since March 2009, the S&P 500 Financials Index has returned better than 260 percent. That’s the sector’s best performance since the late 1990s.