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Stock Market's Performance on The Presidential Election Cycle

(since 1832)

 

The presidential post election year is the most bearish of the four year cycle since 1832. Until 2009, the post-election year lost money since 1832. The DJIA is used since its 1896-inception for these analytics. There were other indices prior to that. They date back to 1832.

The pre-election year has been the most bullish since 1959. Scroll down to see detailed table of data at the bottom of this page. The below chart is logarithmic, illustrating non-adjusted dollars for inflationary effects.

The reason the post-election year is the most bearish along the four-year cycle is simple. Congress usually "goes along" with the newly elected president during the first year in office (the post-election year). Bi-partisanship between the executive and legislative branches of government can only be bearish. Those two branches are maximal representations of OPM disease. Therefore, their use of your money through coercive collections will conclude with maximal inefficiencies. This leeching of funds by the parasitical elite has a depressing effect on the economy and thus the reason no money has been made in the stock market since 1832 during presidential post-election years.

There are exceptions to the previous paragraph. When the incumbent president desires reduced regulations and generally supportive of capitalistic endeavors with agreements from the legislative branches of government, the stock market bull will be aroused. The most recent example of that occurred from 1985 through 1989.

Another exception is when the legislative and executive branches of government are extremely bi-partisan. A "do nothing" government is also extraordinarily bullish. The most recent example of that occurred from 1993-1999.

Finally, the stock market anticipates. If an incumbent is unfriendly to capitalistic desires, declining favorability in polls can incite stock market bullishness. This occurred in 2009.

The below chart highlights this political phenomenon. Again, the presidential pre-election year coincides with political vindictiveness. Politicians on the outside want in. To do that, those on the outside bad-mouth the incumbent. That weakens the incumbent. With that, the stock market rises with political hate speech and the weakening incumbent. Congressional turnover becomes more obvious during this tumultuous period and the stock market bull is delighted knowing that some of the corrupt politicians will be fired. All of that is bullish when the top economic leeches are being attacked by those just below them.

The 2009, 2011, and 2013 tea party candidates, for the most part, turned out to be liars. Their lies, which turned into supporting the incumbent politicians, disappointed the 2015-pre-election year bull. With that, the DJIA was bearish for the first time since 1939 in 2015. Please see the below table for more details. Intellectual arguments against this may be entertaining, but there is no possible argument to the correlation. 

Beginning in 1901, click the Year on the left-hand side of the below table to see the Dow's details for each of the election years. They are highlighted in blue. The DJIA did not exist until 1896. Prior to that, other stock market indices were used.

4-Year Cycle Beginning               Post Election Year Mid-term Election Year Pre-Election Year Election Year
1832 Elected President Party Duration Post-Election Year Mid-term Election Year Pre-Election Year Election Year $10,000 $10,000 $10,000 $10,000
1833 Jackson Democrat   -0.9% 13.0% 3.1% -11.7% $9,910 $11,300 $10,310 $8,830
1837 Van Burren Democrat   -11.5% 1.6% -12.3% 5.5% $8,770 $11,481 $9,042 $9,316
1841 W.H. Harrison Whig Died in Office -13.3% -18.1% 45.0% 15.5% $7,604 $9,403 $13,111 $10,760
1845 Polk Democrat   8.1% -14.5% 1.2% -3.6% $8,220 $8,039 $13,268 $10,372
1849 Taylor Whig Died in Office 0.0% 18.7% -3.2% 19.6% $8,220 $9,543 $12,843 $12,405
1853 Pierce Democrat   -12.7% -30.2% 1.5% 4.4% $7,176 $6,661 $13,036 $12,951
1857 Buchanan Democrat   -31.0% 14.3% -10.7% 14.0% $4,951 $7,613 $11,641 $14,764
1861 Lincoln Republican   -1.8% 55.4% 38.0% 6.4% $4,862 $11,831 $16,065 $15,709
1865 Lincoln Republican Died in Office -8.5% 3.6% 1.6% 10.8% $4,449 $12,257 $16,322 $17,406
1869 Grant Republican   1.7% 5.6% 7.3% 6.8% $4,525 $12,943 $17,513 $18,589
1873 Grant Republican   -12.7% 2.8% -4.1% -17.9% $3,950 $13,306 $16,795 $15,262
1877 Hayes Republican   -9.4% 6.1% 43.0% 18.7% $3,579 $14,117 $24,017 $18,116
1881 Garfield Republican Died in Office 3.0% -2.9% -8.5% -18.8% $3,686 $13,708 $21,976 $14,710
1885 Cleveland Democrat   20.1% 12.4% -8.4% 4.8% $4,427 $15,408 $20,130 $15,416
1889 Harrison Republican   5.5% -14.1% 17.6% -6.6% $4,670 $13,235 $23,673 $14,399
1893 Cleveland Democrat   -24.6% -0.6% 2.3% -1.7% $3,521 $13,156 $24,217 $14,154
1897 McKinley Republican   21.3% 22.5% 9.2% 7.0% $4,272 $16,116 $26,445 $15,145
1901 McKinley Republican Died in Office -8.7% -0.4% -23.6% 41.7% $3,900 $16,052 $20,204 $21,460
1905 T.Roosevelt Republican   38.2% -1.9% -37.7% 46.6% $5,390 $15,747 $12,587 $31,460
1909 Taft Republican   15.0% -17.9% 0.4% 7.6% $6,198 $12,928 $12,638 $33,851
1913 Wilson Democrat   -10.3% -5.4% 81.7% -4.2% $5,560 $12,230 $22,962 $32,429
1917 Wilson Democrat   -21.7% 10.5% 30.5% -32.9% $4,353 $13,514 $29,966 $21,760
1921 Harding Republican Died in Office 12.7% 21.7% -3.3% 26.2% $4,906 $16,447 $28,977 $27,461
1925 Coolidge Republican   30.0% 0.3% 28.8% 48.2% $6,378 $16,496 $37,323 $40,698
1929 Hoover Republican   -17.2% -33.8% -52.7% -23.1% $5,281 $10,920 $17,654 $31,296
1933 F.Roosevelt Democrat   66.7% 4.1% 38.5% 24.8% $8,803 $11,368 $24,450 $39,058
1937 F.Roosevelt Democrat   -32.8% 28.1% -2.9% -12.7% $5,916 $14,562 $23,741 $34,098
1941 F.Roosevelt Democrat   -15.4% 7.6% 13.8% 12.1% $5,005 $15,669 $27,017 $38,223
1945 F.Roosevelt Democrat Died in Office 26.6% -8.1% 2.2% -2.1% $6,336 $14,400 $27,612 $37,421
1949 Truman Democrat   12.9% 17.6% 14.4% 8.4% $7,153 $16,934 $31,588 $40,564
1953 Eisenhower Republican   -3.8% 44.0% 20.8% 2.3% $6,882 $24,385 $38,158 $41,497
1957 Eisenhower Republican   -12.8% 34.0% 16.4% -9.3% $6,001 $32,677 $44,416 $37,638
1961 Kennedy Democrat Died in Office 18.7% -10.8% 17.0% 14.6% $7,123 $29,147 $51,967 $43,133
1965 Johnson Democrat   10.9% -18.9% 15.2% 4.3% $7,899 $23,639 $59,866 $44,988
1969 Nixon Republican   -15.2% 4.8% 6.1% 14.6% $6,699 $24,773 $63,518 $51,556
1973 Nixon Republican Resigned -16.6% -27.6% 38.3% 17.9% $5,587 $17,936 $87,845 $60,784
1977 Carter Democrat   -17.3% -3.1% 4.2% 14.9% $4,620 $17,380 $91,534 $69,841
1981 Reagan Republican   -9.2% 19.6% 20.3% -3.7% $4,195 $20,786 $110,116 $67,257
1985 Reagan Republican   27.7% 22.6% 2.3% 11.8% $5,357 $25,484 $112,649 $75,193
1989 G.H.W. Bush Republican   27.0% -4.3% 20.3% 4.2% $6,804 $24,388 $135,516 $78,351
1993 Clinton Democrat   13.7% 2.1% 33.5% 26.0% $7,736 $24,900 $180,914 $98,723
1997 Clinton Democrat   22.6% 16.1% 25.2% -6.2% $9,484 $28,909 $226,505 $92,602
2001 G.W. Bush Republican   -7.1% -15.9% 25.3% 3.1% $8,811 $24,313 $283,810 $95,473
2005 G.W. Bush Republican   -0.6% 16.3% 6.4% -33.8% $8,758 $28,273 $302,066 $63,203
2009 B.H. Obama Democrat   18.1% 11.0% 5.5%

7.3%

$10,343 $31,383 $318,768

$67,817

2013 B.H. Obama Democrat   26.5% 7.5%

-2.2%

7.3%

$13,084 $33,376 $311,756

$76,904

2017 Trump Republican                  

As you can see from the above table, investing in the stock market has yielded only $3,084-profit since 1832 in presidential post-election years. Keep in mind, that is not adjusted for inflation. That contrast with the $318,768-profit during the presidential pre-election years where a new Congress typically has little respect for the incumbent president. Political bickering and heightened contentious relationships between the executive and legislative branches of government is good for the economy and therefore bullish for the stock market.

The pathetic performance during the presidential post election years reflects a typical harmonistic relationship between the president and congress and thus the reason for the profound absence of stock market bullishness.

Interestingly, the phenomenon of commonality trumps all other elements. As this model gains in popularity, it discontinues working. However, it will adjust back to historical normalcy.

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