Wednesday, December 31, 2003


The gavel came down at the close of trading on the NYSE today with the S&P 500 over 26% higher than on the first day of trading this year. The total domestic market, represented by the Wilshire 5000, finished even higher, as the inclusion of small- and mid-cap stocks propelled it to a 29% yearly gain. Moreover, the major international index of stocks (MSCI-EAFE) was up nearly 38% for the year with most emerging markets posting even gaudier numbers. After three years of pain, stockholders finally found some relief.

To be sure, the (ongoing) mutual fund scandal cast a shadow on the results, but small investors voting with their pocketbooks simply made unscathed fund families the beneficiaries of increased inflows.

Besides the stock market, the economy itself recovered. More jobs were created and more goods and services were produced. As Irwin Stelzer notes, "the rich got richer. . . .and so did everyone else."

All of this, of course, bodes well for the reelection prospects of George Bush as both Stelzer and Larry Kudlow note. If the economy continues on its present course translating into a "Bush landslide", as Kudlow predicts, Bush will have overcome the poor economic legacy of his father. The capture of Saddam has already helped Bush surpass his father's more impressive foreign policy legacy.


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