Can You Use the Dow as an Election Indicator?

October 27, 2012 3:00pm by Barry Ritholtz

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.

Source:
The Dow as an Election Indicator
FLOYD NORRIS
NYT, October 26, 2012
http://www.nytimes.com/2012/10/27/business/the-dow-as-election-indicator.html

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