Financial commentator Lakshya Jain recently highlighted the significant divergence in stock market performance between the current era of "all-time record highs" and the mid-2000s under former President George W. Bush. In a tweet, Jain stated, > "George Bush’s idea sounded great to everyone now, who’s used to all-time record highs in the stock market. This is not the way things were in 2006. You didn’t have the S&P 500 doubling every five years." This commentary underscores a perceived shift in market dynamics and investor expectations.
During George W. Bush's two terms, from 2001 to 2009, the S&P 500 experienced a challenging period. The index notably declined by approximately 31% to 40% overall, making it one of the weakest presidential tenures for stock market returns in modern history. This downturn was largely influenced by the dot-com bust at the beginning of his presidency, the economic impact of the September 11th attacks, and the lead-up to the 2008 financial crisis.
Specifically, in 2006, the S&P 500 did record a positive annual return of 13.62%. However, this single year's gain did not establish a consistent trend of rapid growth, nor did it offset the significant losses and stagnation seen across the broader period of the Bush administration. The market environment then was marked by considerable volatility and lacked the sustained upward momentum observed in more recent years.
In stark contrast, the S&P 500 has demonstrated robust growth in the more recent past. Over the last five years, the index has achieved an average annual return of approximately 14.86% to 15.02% (as of late 2023). This rate of return, when compounded, indeed leads to the S&P 500 nearly doubling its value over a five-year span, aligning with Lakshya Jain's observation about current market conditions.
The disparity in performance illustrates how different economic cycles and global events profoundly impact investor sentiment and market trends. While the Bush era navigated significant economic headwinds, the current period has benefited from various factors contributing to sustained market appreciation, fostering an environment where rapid portfolio growth has become a more common experience for investors.