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Can You Use the Dow as an Election Indicator?

Posted By Barry Ritholtz On October 27, 2012 @ 3:00 pm In Data Analysis,Digital Media,Investing,Markets,Politics | Comments Disabled

Dow Jones Industrial Average performance for 28 Presidential Terms since 1900 

click for ginormous graphic
Source: NYT [2]


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 [3]
NYT, October 26, 2012


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2012/10/can-you-use-the-dow-as-an-election-indicator/

URLs in this post:

[1] Image: http://www.nytimes.com/interactive/2012/10/26/business/Presidential-Stock-Markets.html

[2] NYT: http://www.ritholtz.com/blogwww.nytimes.com/interactive/2012/10/26/business/Presidential-Stock-Markets.html

[3] The Dow as an Election Indicator: http://www.nytimes.com/2012/10/27/business/the-dow-as-election-indicator.html

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