Dow Jones Industrial Average performance for 28 Presidential Terms since 1900 

click for ginormous graphic

Source: NYT


Floyd Norris shows this very cool graphic of market performance under various presidents. The caveat, of course, is that the President does not drive market prices (though their policies can affect markets to0 a greater or lesser degree).

I have stated (repeatedly) that the underlying factors that help an incumbent also tend to drive markets higher. Gains in jobs and income, increases in corporate revenue and profits, improvements in living standards, improvements in investor sentiment and consumer confidence are the sorts of factors that tend to benefit both incumbents and equities.

Its not the market that determines the outcomes of elections, but rather, the same set of forces act upon both politics and equities.



The Dow as an Election Indicator
NYT, October 26, 2012

Category: Data Analysis, Digital Media, Investing, Markets, 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.

5 Responses to “Can You Use the Dow as an Election Indicator?”

  1. RW says:

    Market direction and election results are both an emergent outcome of mass psychological processes and the factors that connect them are probably sparse and loaded with hidden or confounding variables.

    It has been known for some time that the economy generally does better under more liberal policy regimes simply because those regimes tend to put more money into the hands of poorer people where it gets spent faster (money velocity increases) but these days economic fundamentals and market direction do not seem well connected so who knows.

    If I had less sympathy for my fellow citizens and/or was a less consistent libertarian* I wouldn’t mind seeing Romney/Ryan win because it is highly likely the Republicans would do what they’ve always done the past half century and that is spend like drunken sailors. Unfortunately it is all too likely they would also warmonger while attempting to pay for the spree by ‘privatizing’, reducing and/or scavenging social safety nets. Longer term some serious stagflation or outright economic depression would follow.

    *This is what a coherent, logically consistent libertarian argument looks like for those who were wondering.

  2. VennData says:

    Obama has continued to cover up post-Sandy Failures.

    Whoops. we released this too early.

  3. Frilton Miedman says:

    RW, thank you for delineating Libertarians from Austrians, the two ARE NOT the same, FOX network has done an great job mingling Libertarian with Neo-Con/Austrian ideology.

    The article you link to does a great job explaining the concept of velocity, the multiplier, and what “gaming the system” means for a lower income group vs the wealthiest.

    While a family might game the system for $2K for a year in food stamps, we know that money goes immediately and directly back into the economy.

    A wealthy individual like Mitt Romney paying 14% on income of $21 million, who’s saved tax money goes to investing in companies that specifically seek the cheapest labor in the world….we don’t see an ROI for our own economy on that money.

    That money doesn’t return to the economy, not until it’s profitable enough.

    I’m not saying that’s “evil”, it’s a function of Capitalist,, but tax loopholes labeled “job creating” that do not create jobs is gaming the system in a much more damaging way than some family scalping food.

  4. philipat says:


    Sorry, but I don’t follow your logic. Even if you take issue with higher income earners paying a lower total PERCENTAGE tax rate, it still amounts to millions of dollars in taxes actually paid. And the top 10% contribute 80% of all Federal Income taxes collected, even if the net rate paid is lower.

    That pays for quite a lot of SNAP cards and other FSA benefits??

  5. RW says:

    I used to identify myself as libertarian until the label was corrupted by reactionaries, Randian objectivists, revanchists and oligarchs (but I repeat myself) so I switched to ‘progressive’ until the corrupters of discourse — AKA teh stupid or venal — damaged that one too so I just switched to “bite me ya pissant mf!”

    Honoré de Balzac is supposed to have observed that, “behind every great fortune lies a great crime,” but this is really a paraphrase in which he writes (translated), “The secret of a great success for which you are at a loss to account is a crime that has never been found out, because it was properly executed.”

    What a principled and logically coherent libertarian position accepts (IMHO) as a fundamental property of society is that acquired wealth, whether in the form of money or prestige, is itself prima facie evidence of expertise in gaming the system; this is not necessarily a sin but it is also not a particular virtue and it is certainly not worthy of legal protection and promotion.

    But that is what successful folk tend to do: Enshrine their gaming into formal law through whatever influence they can exert; after all, the system supporting ones success must be the best system so let’s make it official, eh.

    There is still far too much egoistic (AKA infantile) logic behind policy and law-making; we lack maturity as a species.