Stock Market Returns by Party
We’ve addressed this before, and came down firmly against these over-simplified arguments. However, I like the way Wolfram’s Mathematica allows you to control, for variables like inflation, policy lag, etc.
In this Demonstration, you can compare what would happen if you left an investment in the stock market (represented by the Dow Jones Industrial Average), but only during those times when either a Democratic or Republican president was in office. Since economic policies can take awhile to take effect, you can choose to shift the time ranges allotted to Democrats vs. Republicans by a fixed amount from the date of the inauguration.
You can also choose whether to include the effects of inflation or dividend reinvestment.
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Previously:
Market Performance by Party? (No)
October 2008
http://www.ritholtz.com/blog/2008/10/market-performance-by-party-no/
November 14th, 2008 at 9:57 am
Consumer Con is up slightly. I was right.
November 14th, 2008 at 10:00 am
wow this is a really nice tool that provides extremely insightful results. /sarcasm
overly-simplistic is the first thought that jumps in my head…the quality of your blog is degrading.
November 14th, 2008 at 10:32 am
Why do all of these tools base their results on which party’s President occupied the White House instead of which party controlled Congress at the time? Since all spending legislation originates in the House, and since the Congress is responsible for all tax laws, etc., it seems like a more useful tool would allow you to see stock market returns based on the majority party in Congress, with about a one-year lag to account for new laws having effects on the economy.
November 14th, 2008 at 10:46 am
When I want statistics devoid of statistical significance, I can read Bespoke’s blog.
November 14th, 2008 at 10:59 am
I find this debate and these tools quite useless. Being that the stock market is a forward discounting mechanism, one cannot compare stock market performance looking only at presidential terms. To make it work at all, it would have to include expectations going into the election. For instance, the market expected an Obama presidency a great deal ahead of the actual announcement, but did not when Bush won 2004. That would be the first step in making this useful in any way; not to mention an extremely difficult one.
November 14th, 2008 at 11:04 am
Way cool! I wonder how the results would turn out if one removed Hoover who, let’s face it, was quite the statistical outlier….
November 14th, 2008 at 5:52 pm
Then again, so was Coolidge!