A BUSH BOOM:

Stock market back in the game, modestly: Since the end of October, when it became clearer that Bush would win, the market has perked up. (Ron Scherer, 12/20/04, CS Monitor)

After collapsing and floundering for about three years, the stock market is finishing 2004 with a solid 8 or 9 percent gain, following a gain of more than 25 percent last year. Some commentators are also optimistic that the elements are falling into place to make 2005 a positive year as well.

The improving health of financial assets has important implications for the economy. It makes it easier for big companies to raise capital to build new factories, which creates new jobs. Entrepreneurs find it easier to raise money to start new businesses. And companies are back to buying other companies, a form of financial Darwinism, which might strengthen the economy.

Moreover, consumers hear the nightly newscasters talk about stock prices on the rise instead of falling every day. "It's making a big impact on people's sense of wealth, an impact on their spending," says Rod Smyth, chief investment strategist for Wachovia Securities in Richmond, Va.

Since the market hit bottom on Oct. 9, 2002, it's added by some estimates about $3 trillion in value to investors' net worth. For example, an investment of $10,000 in the Standard & Poor's 500 Index on Oct. 10, 2002, would be worth $15,406 today. [...]

Investors seemed to be enthusiastic about President Bush's reelection. Since the end of October, when it became clearer Mr. Bush would win, the market has perked up. "I think it's because they view him as relatively light-handed as far as regulatory matters are concerned. He'll be retaining the tax cuts and pressing for tort reform and trying to privatize part of Social Security," says Robert Hormats, vice chairman of Goldman Sachs International. "All of that is considered pro-market."