Source, one of Europe’s leading ETF providers, reckons that US equities are unlikely to perform better during President Trump’s tenure than under many of his predecessors.
Analysis from Source shows that the S&P 500 delivered an annualised return of 13.9% under Barack Obama and 15.2% under Bill Clinton. This ranked their terms fifth and third respectively in terms of stock market gains (since 1853).
However, says Source, with the S&P 500 currently on a Shiller Price-Earnings ratio of more than 282 it is unlikely that it will do better under President Trump.
Head of Research at Source Paul Jackson said: “Such a high Shiller ratio is more commonly associated with negative future returns. Valuations are an important determinant of future returns: Reagan and Obama were helped on that front, as were Harding and Coolidge in 1921. President Trump does not have that luxury. He should not measure himself by what the US stock market says as I fear the judgement will be harsh no matter what he does.”
