US Election
The actual win:lose ratio in the year after an election is quite surprising — being almost equal at 11:10 and so a near 50-50 split. Consequently, there doesn’t seem to be much to be gleaned from this element of the stats in giving us an indication as to how to place our bets next year. The only interesting element, given that the average performance was 8.24%, is that this illustrates that when the market rose historically, it actually rose substantially more than when it dropped. In fact, the average rise amounted to 26.1% whilst the average drop averaged 11.4%.
The Difference Between Democrats and Republicans Let’s try to add another perspective to the data. The following table shows performance for the S&P 500 in the year after an election, but this time splitting the data to account for the winning party.
I don’t know about you, but I found the data somewhat surprising! The Republicans are supposedly the party of business and deemed to be equity friendly and, indeed, Romney’s current election stance is premised upon him being able to steer the US economy to rather more calmer waters than Obama, but looking at both this data and the returns since Obama was elected (the S&P is up almost 50%), this is a spurious assertion not founded on fact if history is any guide.
The data shows there is a huge difference in what happened after an election depending on the winning party. While the S&P rose an astonishing average of 15% when a Democrat won the election, it just flattened with the Republicans in charge. Also noteworthy is the fact that the market rose 8 times out of 11 (a good set of odds to bet on) with a Democrat, and just 3 in 10 with a Republican.
November 2012
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