Election Rally: History Suggests Democrats Better for Stocks

Posted Nov 04, 2008 by Aaron Task in Investing, Newsmakers

The stock market was rallying strongly midday, on track for its biggest election day rally since 1984, Bloomberg reports.

As the market continues its week-long advance, some argue this is evidence of the market warming up to a likely Obama Presidency, while others claim it's merely a snapback from deeply oversold conditions probably.

The answer is probably some combination of the two but, regardless of where you sit on the political spectrum, history shows the stock market fares better under Democratic Presidents vs. their Republican counterparts.

Since 1901, the S&P rose an average 7.2% under Democratic presidents vs. 3.2% under Republicans, according to Ned Davis Research.

Out of the 10 years of negative stocks performance since 1970, 7 occurred during a Republican-controlled White House versus three under Democrat control, according to Ashraf Laidi of CMC Markets U.S.

In the last seven periods when Democrats had complete control of U.S. political power, the S&P 500 rose 14.7% percent on average, according to Bespoke Investment Group.

In the eight times a Republican was president and Democrats controlled Congress, the benchmark index rose 7.4%.

Still, the notion that "gridlock is good" is also borne out, at least in relatively recent history. Of the 28 years of positive stock performance since 1970, 19 occurred during partisan control between the White House and Congress, according to Laidi.

Just some stats (vs. opinions) to keep in mind as you go to the polls and watch the election returns tonight. That said, it's fair to say the current economic environment "really is different" than past election cycles.

Yeah, it looks like the market is LOVING Obama!

U.S. Stocks Tumble in Market's Worst Two-Day Slump Since 1987

By Lynn Thomasson

Nov. 6 (Bloomberg) -- U.S. stocks slid, sending the market to its biggest two-day slump since 1987, after jobless claims jumped and the shrinking economy crushed earnings at companies from Blackstone Group Inc. to News Corp.

Blackstone, the largest private-equity firm, fell 12 percent after posting the biggest quarterly loss in its 18 months as a public company. News Corp. sank 16 percent after the media company controlled by Rupert Murdoch said ad sales decreased. Chevron Corp. fell 6.4 percent as oil tumbled to a 19-month low, while an unexpected decrease in chain-store sales dragged down 25 of 27 shares in the S&P 500 Retailing Index.

``We're a long way from the end of the economic challenges,'' said Mike Morcos, who helps manage $1 billion at Old Second Wealth Management in Aurora, Illinois. ``Earnings next year are going to be significantly lower and estimates are going to continue to come down.''

The Standard & Poor's 500 Index fell 5 percent to 904.88, extending its two-day loss to 10 percent. The Dow Jones Industrial Average retreated 443.48 points, or 4.9 percent, to 8,695.79. The Russell 2000 Index of small U.S. companies declined 3.7 percent to 495.84. The MSCI World Index of 23 developed markets lost 5.9 percent to 925.09.

The two-day tumble following Election Day wiped out more than half of the market's rebound from a five-year low on Oct. 27. Both the S&P 500 and Dow average posted their biggest two-day slides since plunging more than 24 percent as rising borrowing costs helped spur the market crash of October 1987.

The Dow Jones Industrial average closed at 11,351 on inauguration day in 2000. Enough said.

Voter Wrote:
-------------------------------------------------------
> The Dow Jones Industrial average closed at 11,351
> on inauguration day in 2000. Enough said.


There was no inauguration day in 2000. Enough said.

Spoke too soon? Wrote:
-------------------------------------------------------
> Yeah, it looks like the market is LOVING Obama!
>
> U.S. Stocks Tumble in Market's Worst Two-Day Slump
> Since 1987
>
> By Lynn Thomasson
>
> Nov. 6 (Bloomberg) -- U.S. stocks slid, sending
> the market to its biggest two-day slump since
> 1987, after jobless claims jumped and the
> shrinking economy crushed earnings at companies
> from Blackstone Group Inc. to News Corp.
>
> Blackstone, the largest private-equity firm, fell
> 12 percent after posting the biggest quarterly
> loss in its 18 months as a public company. News
> Corp. sank 16 percent after the media company
> controlled by Rupert Murdoch said ad sales
> decreased. Chevron Corp. fell 6.4 percent as oil
> tumbled to a 19-month low, while an unexpected
> decrease in chain-store sales dragged down 25 of
> 27 shares in the S&P 500 Retailing Index.
>
> ``We're a long way from the end of the economic
> challenges,'' said Mike Morcos, who helps manage
> $1 billion at Old Second Wealth Management in
> Aurora, Illinois. ``Earnings next year are going
> to be significantly lower and estimates are going
> to continue to come down.''
>
> The Standard & Poor's 500 Index fell 5 percent to
> 904.88, extending its two-day loss to 10 percent.
> The Dow Jones Industrial Average retreated 443.48
> points, or 4.9 percent, to 8,695.79. The Russell
> 2000 Index of small U.S. companies declined 3.7
> percent to 495.84. The MSCI World Index of 23
> developed markets lost 5.9 percent to 925.09.
>
> The two-day tumble following Election Day wiped
> out more than half of the market's rebound from a
> five-year low on Oct. 27. Both the S&P 500 and Dow
> average posted their biggest two-day slides since
> plunging more than 24 percent as rising borrowing
> costs helped spur the market crash of October
> 1987.


I don't see any mention of Obama as being the reason the market tumbled.

I do see mention of the market reacting to jobless claims and the shrinking economy crushing earnings:

"U.S. stocks slid, sending
> the market to its biggest two-day slump since
> 1987, after jobless claims jumped and the
> shrinking economy crushed earnings at companies
> from Blackstone Group Inc. to News Corp. "

My apologies--inauguration day 2001. I don't quite see how that changes my point, though.


Bob Wrote:
-------------------------------------------------------
> Voter Wrote:
> --------------------------------------------------
> -----
> > The Dow Jones Industrial average closed at
> 11,351
> > on inauguration day in 2000. Enough said.
>
>
> There was no inauguration day in 2000. Enough
> said.

And just in case my point still isn't clear: the Dow is around 8853 today, about 2500 points lower nearly 8 years after Shrub and turd blossom rode into town. What the stock market does in any one day doesn't mean shit and you shouldn't bother paying attention to it. It's what it does over the long term that counts, and I think the verdict on the Bush administration is pretty clear. If the Dow is 2500 points lower 4 years from now then you could make an argument that Obama's policies haven't been good for the markets.

I saw gas below $2 a gallon for the first time in years over the weekend. I guess we should credit Obama for that.

WashingToneLocian Wrote:
-------------------------------------------------------
> I saw gas below $2 a gallon for the first time in
> years over the weekend. I guess we should credit
> Obama for that.

I find it incredibly convenient that oil prices skyrocketed during the final throes of the Bush presidency, and that Bush has ties to the oil industry.

Two months ago, we're paying $4.00 a gallon, and now it magically drops to the point where OPEC is considering cutting production?

I'm not one for conspiracy theories, but like I said, it just seems too convenient.

I guess we can consider it payback for when the Saudis manipulated oil prices lower to help Bush before the 2004 election.

http://www.msnbc.msn.com/id/4779686/

MrMephisto Wrote:
-------------------------------------------------------
> WashingToneLocian Wrote:
> --------------------------------------------------
> -----
> > I saw gas below $2 a gallon for the first time
> in
> > years over the weekend. I guess we should
> credit
> > Obama for that.
>
> I find it incredibly convenient that oil prices
> skyrocketed during the final throes of the Bush
> presidency, and that Bush has ties to the oil
> industry.
>
> Two months ago, we're paying $4.00 a gallon, and
> now it magically drops to the point where OPEC is
> considering cutting production?
>
> I'm not one for conspiracy theories, but like I
> said, it just seems too convenient.


Well, according to the leaked information from Cheney's "Energy Policy Meeting" with oil executives in 2001, he promised them $100 a barrel oil by the end of the Bush term.

He succeeded, until the economy imploded.

But considering the price of a barrel when Bush was inaugurated was $28, they still succeeded by doubling the price.



Edited 1 time(s). Last edit at 11/11/2008 12:01AM by Bob.

Half-a-million Americans lost their jobs last week, but this is somehow Obama's fault...

The Labor Department reported Thursday that jobless claims shot up by 32,000 last week to a seasonally adjusted 516,000, the highest total in seven years.

Bob Wrote:
-------------------------------------------------------
> MrMephisto Wrote:
> --------------------------------------------------
> -----
> > WashingToneLocian Wrote:
> >
> --------------------------------------------------
>
> > -----
> > > I saw gas below $2 a gallon for the first
> time
> > in
> > > years over the weekend. I guess we should
> > credit
> > > Obama for that.
> >
> > I find it incredibly convenient that oil prices
> > skyrocketed during the final throes of the Bush
> > presidency, and that Bush has ties to the oil
> > industry.
> >
> > Two months ago, we're paying $4.00 a gallon,
> and
> > now it magically drops to the point where OPEC
> is
> > considering cutting production?
> >
> > I'm not one for conspiracy theories, but like I
> > said, it just seems too convenient.
>
>
> Well, according to the leaked information from
> Cheney's "Energy Policy Meeting" with oil
> executives in 2001, he promised them $100 a barrel
> oil by the end of the Bush term.
>
> He succeeded, until the economy imploded.
>
> But considering the price of a barrel when Bush
> was inaugurated was $28, they still succeeded by
> doubling the price.

Where can I get ahold of this leaked info?

The Bush Administration has loaned $5 trillion, above and beyond the $700 billion bailout, but won't reveal who has received the loans. Yet the bad stock market is somehow Obama's fault.

Worst stock market slump in history after an election. Maybe it has something to do with a guy named Hussein just like me.

Markets Rallied again almost 7% this afternoon, mostly in the last two hours of trading. Market slump is a result of lack of consumer confidence and frozen credit markets thanks to Bush and his GOP friends. They keep pushing for deregulation and like to spend money they don't have. That's Republican for ya.

Obama pushed the Dow up 552 points today after Bush brought it down over 600 points earlier in the week.

Looks like Obama yo Mama just dropped the market again...Ah well it's gonna be nice when interest rates go up to 20% just like the Carter times.

You are ignorant and likely doesn't understand even the most elementary economic policy. Get a degree in finance or economics or, the cheaper alternative, subscribe to the WSJ. Cheers.

I agree to subscibe to the WSJ as long as you tell me how much the market has dropped since election day. I'm not asking for too much. Very simple.

It's not even at it's all-time low during the Bush regime, which is still on-going. This is a residual effect that has nothing to do with Obama's victory. You can visit Bloomberg to see what effect Bush has had on our economy and it's artificial value in the previous 8 years. Good luck to you and your search.

All I asked was a simple question and you can't even tell me? Too bad you've now proved you're the dumb-ass.

I don't need to quote artibitrary information that you could research yourself. I bill out at $550/hr. If you care to fork over some coin, and I'll gladly put together a powerpoint slide with historial values and trends. Or, you could easily find this information yourself, with a subscription. I just don't do pro bono work for ignorant fool with no prospect of new business.

hahahahaahahaha. You're a idiot. BTW Hussein = Your next President

No, it's Barack. B.A. Barackas M.F.er!

Hey, I get it. You lost the election, you're upset and feeling a emotionally unstable. Don't worry. There's always hope that McWrinkle will run again in 2012 when he's 76, or even in 2016 when he's 80 and pissing in a bed pan. He's your guy. Country First, right?

Hussein Wrote:
-------------------------------------------------------
> Looks like Obama yo Mama just dropped the market
> again...Ah well it's gonna be nice when interest
> rates go up to 20% just like the Carter times.


Hey dickhead, Obama isn't the president yet.

But, I suggest you stock up on canned beans, bullets and guns and hole up in some wooded compound and keep practicing on the target range.

Don't forget, people like you were forming militias during the clinton administration, fearing all those white UN vehicles that were being shipped into Corpus Christi for the coming liberal socialist UN takeover of America. You can relive those great times all over again!

Maybe one of your friends will even buy up a ton of fertilizer and diesel fuel and blow up a federal building. Won't that make you proud?!?!

I hate people who listen to hate radio and watch Fox News. I wish you uneducated and impressionable people would just go away.

You're funny BOB! I get all my news from MSNBC. Why don't you go tell all of this crap to the NRA? I forgot you don't have any balls!

Registered Voter can't even post as himself anymore. This is sad. We should at least give them the Stevens race in Alaska.......whoops.

Hussein Wrote:
-------------------------------------------------------
> You're funny BOB! I get all my news from MSNBC.
> Why don't you go tell all of this crap to the NRA?
> I forgot you don't have any balls!


Next time I'm at the NRA shooting range, I'll be sure to laugh about all the far-right whackos that are not allowed to use the range because even the NRA doesn't like the survivalist types.

the market warms even more to a GOP takeover of the House:

http://www.bloomberg.com/news/2010-10-06/asia-stocks-climb-to-26-month-high-treasuries-japan-bond-yields-decline.html

Happy days are here again..........

.
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