Political Effect on the Dow Jones
Industrial Average
Compiled by
David Pakman
After many emails inquiring about the truth behind which
political party has experienced better stock market results,
I've put together the following information. A few things to
remember are that we came up with all of this data
from scratch. All of the calculations were made manually,
and there have been no exaggerations, manipulations, or
anything of the sort as far as the data is concerned. With
that being said, we fully expect to get bombarded with both
compliments and complaints about this feature, but hopefully
it won't involve the validity of the data used.
As far as the reasoning behind some of the data: 1928 is the
first year used in this study because that is when the Dow
Jones index was created. This index is the oldest, therefore
we used it rather than the NASDAQ or S&P 500. Data for each
year is from January 1st to December 31st of that year.
Dow Jones Industrial Average
Performance, Linked to Political Party in the White House
(1928-2003)
Measure
Democrats
Republicans
Years in Office
40
35
Years DJIA Up While in
Office
29
20
Years DJIA Down While
in Office
11
15
Average Loss During
Down Year
-11.84%
-16.84%
Average Gain During Up
Year
+17.76%
+19.00%
Average % Gain/Loss
While in Office
+9.604%
+3.64%
Without turning this feature into a political statement or
exhibit, we can summarize history this way:
72.5% of Democratic
presidential years resulted in the Dow rising, while 57%
of Republican presidential years resulted in a higher
Dow.
Democrats have outperformed
Republicans on a per year basis of 5.964%, or
about 2.63 times as much.
The average Republican
down year lost an average of 5% more than the
average Democrat down year.
The average Republican
up year gained an average of 1.24% more than the
average Democrat up year.
What can we determine from
this? It's difficult to say. One thing would be that the
general consensus among both the general public as well
as traders and brokers is that Republicans are better
for the markets, although historically we see this isn't
true.
Please feel free to comment on
this article by dropping me an
email.
