Sunday, January 19, 2020

US Stock Surge Continues


The US Stock prices continue to increase at historic rates over the past 3 years under the Trump Economy.

Dow Closing  Average   3Yr Increase  Gains     
Jan 17 2020   29,347.08    8292.24     40%
Jan 1   2017   21,016.21

NASDAQ Closing Average 3Yr Increase Gains
Jan 17 2020   9,388.94        4006.82      74%
Jan 1 2017     5,383.12

S&P 500 Closing Average 3Yr Increase Gains
Jan 17 2020    3329.49        918.45        38%
Jan 1 2017      2411.04


S&P 500 Up 17.8% - The S&P 500 Average closed in 2018 at 2743.21 and increased in 2019 to 3230.78, up 487.57 points from 2018. That’s a 17.8% increase.  The S&P 500 Average is up 46.7% since 2017.  That’s up 1136.13 points from 2094.65 to 3230.78. The S&P index at 8AM on 1/17/20 is 3316.81.

Year    S&P Ave   Increase Gains
2020   3329.49     99.71                Trump
2019   3230.78   487.57   17.8%   Trump
2018   2743.21   314.13   12.9%   Trump
2017   2429.08   334.43   16.0%   Trump
2016   2094.65     33.58     1.6%   Obama
2015   2061.07   129.69     6.7%   Obama
2014   1931.38   287.58    17.5%   Obama QE
2013   1643.80   264.19    19.1%   Obama QE
2012   1379.61   239.64    21.0%   Obama QE
2010   1139.97   191.92    20.2%   Obama QE
2009    948.05   -271.99   -22.3%   Meltdown
2008   1220.04  -257.14   -17.4%   Bush
2007   1477.18   166.72    12.7%    Bush
2006   1310.46  

The Mortgage Meltdown in 2008 resulted in drops in the S&P in 2008 and 2009. It was caused by Democrat initiated anti-discrimination laws requiring banks to give mortgage loans to unqualified buyers. Mortgage defaults cause dollar liquidity to freeze and the US Federal Reserve printed and provided $4 trillion to the banks. This printed money was called “Quantitative Easing” (QE).  Banks lent this money to day traders, who invested it in the stock market.

The S&P 500 Average Closing Price 2000 to 2019
2000 1427.22
2001 1192.57
2002   993.93
2003   965.23
2004 1130.65
2005 1207.23
2006 1310.46
2007 1477.18
2008 1220.04
2009   948.05
2010 1139.97
2011 1267.64
2012 1379.61
2013 1643.80
2014 1931.38
2015 2061.07
2016 2094.65
2017 2429.08
2018 2743.21
2019 3230.78

The S&P index includes Dow 30 companies. 401k investments that include stock are earning very high returns.
The US has over 160 million employees working. If half of these or 80 million have 401k plans, they have gained over 50% over the past 3 years.

If an employee who averages $50,000 in salary contributes 5% to their 401K plan, they would invest $2500 a year. Over the past 3 years stock accounts had gains of over 50%.

If 50 million employees save $2500 in 401k plans, the annual investment in stock would be $1.25 billion. If divided by 500 companies the average investment is $2,500,000 per year, per company. Their money goes to providing capital for US companies.

Congress passed the Revenue Act of 1978 that created the 401k plans. US Stock values rose gradually as companies introduced the 401k plans to employees.

The S&P 500 Average Closing Price 1978 to 2000
1978 96.11
1979 103.00
1980 118.71
1981 128.04
1982 119.71
1983 160.47
1984 160.46
1985 186.83
1986 236.39
1987 287.00
1988 265.88
1989 323.05
1990 334.63
1991 376.19
1992 415.75
1993 451.61
1994 460.42
1995 541.72
1996 670.49
1997 873.43
1998 1085.50
1999 1327.33
2000 1427.22

Employees chose in fixed interest investments from the 1960s to 1990, but as inflation declined so did interest earnings. After 1990, investors began to invest in stocks. This pushed up stock prices and continues to push companies to produce profits.

Prior to 1913, companies were family-owned and owners could retain their own profits to reinvest in creating the Industrial Revolution. After 1913, corporate taxes on profits reached 90%. After 1980, corporate taxes were reduced and are now 21% and unnecessary regulations have been removed. The jobs that were off-shored from 1990 to 2016 are returning to restore the US middle class.

Norb Leahy, Dunwoody GA Tea Party Leader

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