Is Ben Bernanke the Best Fed Chairman in History?
A highly accommodating monetary policy has been the foundation of the Federal Reserve since the credit meltdown of yesteryear. Over the past five years, the central bank has kept interest rates at record lows and purchased an unprecedented amount of bonds. Stocks have rallied to new all-time highs as a response, but is Ben Bernanke the market’s favorite Fed chairman?
Bernanke became the leader of the Federal Reserve in 2006. His tenure started smoothly, but it was interrupted by the worst financial downturn since the Great Depression. Even so, the Dow Jones Industrial Average and S&P 500 have been making new highs on a regular basis this year, while the Nasdaq is near its highest level in 13 years.
There have been 14 leaders of the central bank since it was created in 1913. Eugene Meyer, who served during the beginning of the Great Depression, is the only leader to witness a decline in the Dow over his tenure, according to Bespoke Investment Group. Let’s take a look at the market’s 10 favorite Fed chairmen, based on the Dow’s performance.
10. William Miller
Miller’s tenure as Fed chairman extended from March 1978 to August 1979. Although his time was short, the Dow managed to rise 13 percent during his stay. The Dow increased 9 percent on an annualized basis.
9. Roy Young
Young served as chairman of the Federal Reserve from October 1927 to August 1930. During that period, the Dow increased almost 21 percent, or 6.7 percent on an annualized basis.
8. Charles Hamlin
Hamlin’s reign at the central bank began in August 1914 and ended two years later. The Dow jumped almost 29 percent over that time span for an annualized gain of 13.4 percent.
7. Thomas McCabe
McCabe’s tenure as Fed chairman started in April 1948 and ended in March 1951. Under his leadership, the Dow increased 37.5 percent for an annualized gain of 11.4 percent.
6. Ben Bernanke
The current Fed chair has witnessed a strong rebound in stock prices, but he is not quite the market’s favorite chairman. Bernanke was appointed as Fed chairman in February 2006. Since then, the Dow has rallied 43 percent.
5. Marriner Eccles
Eccles served as Fed chair from November 1934 to January 1948. During that period, the Dow rose 75.3 percent, or 4.3 percent on an annualized basis.
4. Daniel Crissinger
Crissinger had the good fortune of leaving the central bank before the Great Depression occurred. His tenure as Fed chairman lasted from May 1923 to September 1927. The Dow enjoyed a 104.3 percent rally under his leadership, or 17.72 percent on an annualized basis.
3. William Martin
Martin’s tenure as Fed chairman lasted from March 1951 to January 1970. During that period, the Dow gained 202 percent for an annualized gain of 6 percent.
2. Paul Volcker
Volcker served as Fed chairman from August 1979 to August 1987. He also had the good fortune of leaving before a major stock market crash, known as Black Monday. Under a Volcker-led Fed, the Dow climbed 216 percent higher, or 15.4 percent on an annualized basis.
1. Alan Greenspan
The so-called maestro led the Federal Reserve from August 1987 to January 2006. During that period, the Dow surged 305.3 percent for an annualized gain of 7.9 percent. However, the housing boom and bust serves as a reminder that there are costs associated with excessive monetary easing.
Follow Eric on Twitter @Mr_Eric_WSCS