Donald Trump appears to have created $2.375 Trillion in new stock market wealth, but Why?

Donald Trump appears to have created $2.375 Trillion in new stock market wealth, but Why?
OpenClipart-Vectors / Pixabay

On November 7, 2016, Bloomberg reported that the value of all United States equities was $23.742 trillion.  By the close on February 14, 2017, the value had risen more than $2.375 trillion dollars.  The increase, furthermore, was based on little fundamental economic news other than the election of a new President.
Needless to say, there has been a good deal of speculation as to why Donald Trump appears to have created $2.375 trillion in new stock market wealth.  One hypothesis is that the run-up is due to the expected passage of tax reforms and a cutback in costly regulation.
Another theory, not so flattering to Mr. Trump, is that his administration is sufficiently disorganized that little will be accomplished but that slowing things down in Washington is bullish for American business.
Whatever view you take to explain the Trump value creation it should give Democratic leaders pause.  They have pilloried Trump as incompetent, uninformed, dishonest, and on and on.  But if they are right, and Trump is the disaster they say he is, then how do they explain the wealth creation?  It seems to suggests that even a disaster like Trump is good for American business if he gets the country off the regulatory road the Democrats were following.  It might be a good time to rethink some of those policies before another election rolls around.

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Bradford Cornell is an emeritus Professor of Financial Economics at the Anderson School of Management at UCLA. Prof. Cornell has taught courses on Applied Corporate Finance, Investment Banking, and Corporate Valuation. He is currently developing a new course on Climate Change, Energy and Finance. Professor Cornell has published more than 125 articles and four books on a wide variety of topics in applied finance. Professor Cornell is also a managing director at BRG where he heads the practice on Climate Change, Energy and Finance. In addition, he is a senior advisor to the Cornell Capital Group and to Rayliant Global Advisors. In both capacities, he provides advice on fundamental investment valuation.

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