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Pdog
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Re: Obama elected President
Reply #1670 - Nov 13th, 2008 at 8:43am
For those too stupid to read... FYI, if you have any money... NOW, is a great time to invest long term. If you're a greedy get rich now type, you probably just were at another AIG, taxpayer funded Executive event!
From Forbes, a well known Liberal Media, and biased media... haha
Special Report
Presidents And The Stock Market
Dan Ackman, 07.21.04, 3:00 PM ET
NEW YORK - Does the president affect your portfolio? Candidates would certainly like you to think that the answer is yes, and that the particular candidate doing the talking is better than the other guy.
Over the years, several studies have shown that the stock market has fared markedly better under Democrats than Republicans. (see: "The Presidential Portfolio") The difference, according to Pedro Santa-Clara and Rossen Valkanov, both professors at the University of California Los Angeles Anderson School of Business, is much too large to be random and cannot be explained by fluctuations in the business cycle. Nor can it be explained by higher interest rates in Republican administrations.
The UCLA professors looked at data going back to 1927. Our own study of the post-World War II presidencies confirms their results. We found that the S&P 500 has averaged a total return of 14.1% per year under Democratic presidents since April 1945, and 11.8% under Republicans. The best total returns--17.4% per year--were under Bill Clinton, whose presidency ranked first in economic results. (see: "Presidents And Prosperity") Gerald R. Ford ranks second, followed by Harry S. Truman.
Presidents And The Stock Market
President Term Economic Rank S&P 500 Start Of Term S&P 500 End Of Term S&P 500 Annualized Total Return (%) Stock Market Rank
Bill Clinton 1993-2001 1 433.37 1,342.54 17.4% 1
Gerald R. Ford August 1974-1977 5 86.02 102.97 17 2
Harry S. Truman April 1945-1953 7 13.64 26.57 15.6 3
Dwight D. Eisenhower 1953-1961 9 26.57 58.11 14.9 4
Ronald Reagan 1981-1989 4 131.65 286.63 14.4 5
George H. W. Bush 1989-1993 10 286.63 433.37 14.4 5
John F. Kennedy 1961- November1963 3 58.11 74.01 12.4 7
Jimmy Carter 1977-1981 6 102.97 131.65 11.2 8
Lyndon B. Johnson November 1963-1969 2 74.01 103.86 10.2 9
Richard M. Nixon 1969-August 1974 8 103.86 86.02 0.6 10
Source: Forbes statistics
However, no one, including Santa-Clara and Valkanov, seems to know why the market does better under Democrats. Another puzzle: There seems to be little correlation between economic performance and the market.
Under Ford, for example, the economy was middling but the market enjoyed a 17% total annualized return (share price gains coupled with reinvested dividends). This result may be a fluke as the market fared very poorly just before him under Richard M. Nixon (0.6% return) and continued at sub-par levels under Jimmy Carter. The Truman and Dwight D. Eisenhower economies were underwhelming, but the market averaged a total annual return of better than 15% during their years in office.
Clinton apart, the presidents who presided over strong economies did not enjoy particularly strong stock markets. Under Lyndon B Johnson, for instance, gross domestic product growth was at its height--but the S&P 500 results for LBJ were worse than for any postwar president except Nixon. John F. Kennedy was the third best president for the economy, but "his" stock market was below average. President George H.W. Bush presided over a sour economy but an average market.
Why the disconnect? Market economists say that investors don't particularly care about GDP or employment or even average personal income. Investors focus on corporate earnings, particularly projected earnings, and on interest rates. "Stock investors don't care about the economy. They care about earnings," says Richard DeKaser, chief economist at National City, a Cleveland-based financial holding company. DeKaser cites the so-called Alan Greenspan model for share price returns which holds that stock prices are a function of projected earnings discounted by rates on ten-year Treasury bills.
Other economists say there is a relationship between the economy and share prices, but it works in complicated ways. There may be a substantial lag time between economic gains and share price gains. On the other hand, share prices may rise in anticipation of better economic times rather than in reaction to actual prosperity. Share prices also may rise if investors' negative expectations in a given situation are not realized. Management consultant Peter Cohan says investors have poor expectations of Democrats, so once the Democrats are in power, stocks rise in relief "when it turns out they don't screw up the economy."
For that reason, some advise that investors temper their expectations. Says David Kelly, an economic adviser to Putnam Investments: "Bottom line, I think people should not let how they feel about politics affect how they feel about investing."
More From Forbes
Presidents And Prosperity 07.20.04
The economy did best when Clinton was in office, with Johnson, Kennedy and Reagan as the runners-up.
The Presidential Portfolio 02.17.04
Stocks or bonds? It depends on who wins in November.
DO NOT READ
STUPID ALERT!!!
By Adam Shell, USA TODAY
NEW YORK — Money and power collide every four years at the intersection of Wall Street and Pennsylvania Avenue.
Even though the U.S. president can't legislate bull markets or veto bears, that hasn't stopped historians from crunching stock returns to determine what impact politics has on stocks.
Let's bust one myth: namely, that Republican presidents are better for stocks. It is not true. In election cycles since World War II, the Dow Jones industrials have posted bigger average returns under Democratic presidents, the Stock Trader's Almanac says.
Wall Street's scrutiny of the 2008 race for the White House between Democrat Barack Obama and Republican John McCain has been especially intense given the fragile state of the economy.
"The credit crisis has forced both candidates to put the economy at the center of their campaigns," notes Robbert van Batenburg, head of global research at Louis Capital Markets, in a report, "The Final Stretch: Stocks Sensitive to Election Outcome."
FIND MORE STORIES IN: Congress | White House | Barack Obama | United States Senate | Wall Street | World War II | Dow Jones
Wall Street has been churning out election-related research on stocks and the presidency:
•In "Election 2008," Jeffrey Kleintop, chief strategist for LPL Financial, says stocks tend to perform better in periods of legislative gridlock, when presidential power is offset by the opposition party controlling Congress.
However, it appeared late Tuesday that although Obama won the White House, Democrats did not gain control of 60 Senate votes, which would have given them a filibuster-proof majority to push through their agenda. "While the president has a lot of impact on foreign policy and trade," he says, "the Senate sets the pace on taxes, laws affecting business and other issues of interest to investors."
•In "Presidential Cycle," Ned Davis Research notes the S&P 500 posted its weakest returns in the first year of the four-year election cycle. Since 1900, stocks have gained just 3.4% on average in the post-election year, compared with gains of 4.0% in the midterm year, 11.3% in the pre-election year and 9.5% in an election year.
Even after Tuesday's 305-point surge to 9625 in the biggest Election Day rally ever, the Dow is down 27.4% this year. How have stocks fared from Election Day to year's end? When a Democrat wins, stocks have lost 1%, while rising 4% if a Republican wins, Bespoke Investment Group says.
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