Yet another fascinating pair of charts from The Chart Store — this one, looking at market performance based Presidential Cycles

Ron Griess notes that:

Stock market action during the Presidential Cycle is often an interesting topic.  We present below the historical record ofthe Dow Jones Industrial Average (DJIA) in the second calendar year of the cycle.  We begin with a statistical table of all second calendar years of the Presidential Cycle since 1889.

Year 2 of the Presidential Cycle – The Historical Record

The following table breaks down the same statistics by political party.


Category: Investing, Politics

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

13 Responses to “Year 2 of the Presidential Cycle – The Historical Record”

  1. wunsacon says:

    My guess is that the influence of:
    (a) “D” vs “R” and
    (b) “1st year” vs “2nd year”
    is a blip of noise on whatever signal generated by the confluence of economic trends, technological trends, and Bennie’s/Timmy’s game plan.

  2. call me ahab says:

    Eisenhower- what a stud-

    plays golf and the market goes up

  3. MorticiaA says:

    Would like to see the data extended to show which party controlled Congress at same time. Perhaps I’ll spend the time to research the ones I don’t know off top of my head.

    ~~~

    BR: I’ve seen that analysis somewhere — maybe Jim Bianco did it? — hunt around, its out there.

  4. Patrick Neid says:

    Here’s the touchstone of Presidential election investing. Putting aside the laughable partisanship that folks puts in election cycles here’s the rub. From Jan 1st of first year to Sept 30th of second year, stand aside. From Oct 1st of second year stay fully invested until Dec 31st of fourth year. Results: 72 g’s vs $643……

    …….”The findings in Table 3 are extremely interesting. The first investor put up money 13 times and did not lose money in any period. Gains ranged from a high of 70 percent prior to the 1976 election to a low of 16 percent before the 1960 election. Investor 1 saw the original investment of $1,000 grow to $72,701. This is a percentage gain of 7,170 percent. Investor 2 was not so fortunate. This individual also anted up 13 times, but lost six times. The largest loss of -36 percent was seen after the presidential election of 2000. Investor 2 saw the original $1,000 shrink to only $643, or a loss of -36 percent, in nearly five decades. That percentage is based on nominal dollars and does not include the impact of inflation.”

    http://gbr.pepperdine.edu/043/stocks.html

    If you are in a hurry scroll down to table 3. You do realize that now that you have seen these results they will no longer work!

  5. Marcus Aurelius says:

    Maybe we could break the cycle by having Presidential terms of office be indeterminate in duration. Y’know — like the Italians do.

  6. Mysticdog says:

    Apparently scientists and economists have very different definitions of a “cycle”. And you really have to be suspicious of a study that shows GWB having been a great president for the stock market. That is some serious cherry picking.

    Is it safe to say that the difference in this study is well within the STD for the data?

    I bet the correlation between year 2, 3, and 4, not to mention years 2-4, would be much more informative.

    But of course, comparing full presidential terms has been done and the results are a little more skewed…

  7. ifish says:

    call me ahab Says:

    January 8th, 2010 at 12:11 pm
    Eisenhower- what a stud-

    plays golf and the market goes up

    ———

    Hoover – what a schmuck!

    he fishes and the financial markets crater.

    How about dubya?

    ~ Ifish(for dinner)

  8. call me ahab says:

    ifish-

    Hoover did like to fish- I have been to Camp Hoover on the Rapidan river in the Shenandoah Mountains- where Hoover took his summer retreats-

    pretty cool little place- brook trout abound

  9. ifish says:

    You bet he liked to fish!

    Jimmy Carter too.

    How about Dubya?

    Remember him?

    What he like to do?

    Oh BARR-AHHHHH-REEEEEE! How about a chart with direct corelations of presidents pasttimes (fishing, golf, cards, sex) to how the market reacted at the end of their terms?

    Ifish(every waking moment).

  10. SecondLook says:

    MorticiaA

    “Would like to see the data extended to show which party controlled Congress at same time. Perhaps I’ll spend the time to research the ones I don’t know off top of my head.”

    While studies have shown that equity markets in general, since 1901, have performed better during periods of Republican control of Congress, the problem is that the number of times that the GOP has had control is so limited as make it questionable as any kind of indicator.

    Out of 55 Congresses, Republicans controlled both houses 13 times. Of those, 5 were from 1901-1911, 5 during 1921-1931, once in 1953-55, and from 2003-2007.
    - From 1901 to 1911, market gains were very modest; some consider it a long secular bear market. The 1920′s were famously a roaring bull market. 1953-55 was a strong bull market, as most of the 50′s were, and 2003-07 also.

    Democrats had control for 20 Congresses. From 1913-1919, 1933-1947, 1949-53, 1961-1969, 1977-1981, 1993-1995, and now.
    During much of their full control the country was in one kind or another economic crisis, often due to factors that long preceded their gaining power.

    The other 19 were divided in control.

    Further, from about 1901 to the 1970′s, Southern Democrats constituted a party within a party, the “Dixiecrats”. Their economic agenda, while it had populist overtones, tended as the decades went on to be more and more aligned with GOP (Which made their eventual migration over to GOP easier – besides the more obvious backlash against the civil rights movement).
    So, while the Democrats may have had control for long periods, that didn’t necessarily mean that they could have an affect on economic policy via laws and regulations as much as you might think.

    There are just too many variables in the economic equation. Control of Congress may be one of the more inconsequential ones when future historians look back to the late Middle Ages (stealing a line from Hermann Hesse’s “The Glass-Bead Game”, which is set roughly in the 25th century – from their longer perspective, their historians regard the Middle Ages as lasting until the 20th century).

  11. Food4thot says:

    I don’t want to be a doom & gloom guy but…

    It would appear that true cyclic market corrections, to the tune of -26% to -30%, were the norm with the exception of WWII period (as would be expected). These substantial corrections all but stopped during/after the Regan Admin. Coincidentally, a greatest influx of public debt has occurred during/after the Regan Admin as well. Does this mean that a continually escalating correction period is inevitable? Or does it mean that the Gov’s/FED’s monetary policies are effectively doing what we all hope they would do?

  12. Greg0658 says:

    to SecondLook@2:03am .. thanks for the rundown

    ie Dems “the country was in one kind or another economic crisis, often due to factors that long preceded their gaining power” … wanted to highlight that statement … because imo we Americans want the Cap’ism game to work but kinda look to So@lism to fix things back up (gut talking) .. I don’t know if facts or charts could prove that tho