Dow's Decline Points to Possible Kerry Victory

[wildflower]

Dow's Decline Points to Possible Kerry Victory: John Dorfman

Oct. 14 (Bloomberg) -- If the Dow Jones Industrial Average continues its current decline, we may be inaugurating John Kerry as president.

That's a prediction based on data developed by James Stack, a market pundit from Whitefish, Montana. Stack notes that in 24 of the 26 U.S. presidential elections since 1900, the direction of the stock market in the two months preceding the vote accurately predicted the election.

A gain in the Dow Jones Industrials predicted a victory by the incumbent party. If the Dow fell, the incumbent party lost. The only two exceptions were 1956 (when the Dow dropped 2.8 percent but Dwight D. Eisenhower won re-election) and 1968 (when the Dow rose 3.1 percent but Hubert Humphrey and the incumbent Democrats lost to Richard Nixon).

So far, the Dow has a total return of negative 1.9 percent after dividends from Sept. 2 through Oct. 12.

Politics and stocks intersect in two ways. You can buy stocks that may get a short-term or intermediate-term lift from one candidate's victory. Or you can watch stocks in the days leading up to the election to see if the market is giving a hint as to who will win.

...the rest of the article is at:

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_dorfman&sid=a4v7LzsIOS9M

[SoCalDem]

1. Repubes will spin it to be just the opposite

Since it looked like Kerry is ahead, they will say that the market is "afraid", and that's why it's tanking..just you watch

[cthrumatrix]

6. AIG (down over 10%)...skews the dow... it's not Kerry

[Cocoa]

2. I thought it was the other way around

Dow dropping because a Massachussetts liberal has a chance of winning the presidency. :scared:

[medeak]

3. a close friend to Ted Kennedy!

omg...

[underpants]

4. So the tanking as soon as W got in office is Kerry's fault too?

Yeah right.

[The Velveteen Ocelot]

5. I thought it was Bill Clinton's fault.

Everything else is.

[underpants]

9. Right I forgot the Reagan boom of the 90's finally was overtaken by...

The Clinton economic policies thus the recession (no matter when it started).

[Media_Lies_Daily]

10. That's correct...although the ongoing 2001 recession....

...officially started in March 2001, it was all Clinton's fault.

And even though the NeoCon Junta declared that the recession was over quite some time ago, the economy STILL sucks out loud and jobs are scarce. But that was Clinton's fault, too.

And our current terrible international relations...Bill REALLY messed that up, didn't he?

And all of thos hurricanes this year...Bill must have done that, too!

Dadgumit, Bill! Will you PLEASE stop messing around???

[booksenkatz]

13. Yeah, now that y'all mention it...

when does the shift from blaming President Clinton to blaming President Kerry occur? The R's will be so torn as to whom to blame for any given thing! LOL They will never, ever blame their latest one-termer.

[swag]

7. Dow now down 3.7% since 09/02 with dividends included

What a difference two days make. Dow would need to surmount 10290 to get back to even since 09/02, and 19 days of a 2.14% annual dividend yield isn't gonna count for much. This "indicator" is very likely to be declaring Bush "toast" on 11/02/04.

Here's an update of the S&P 500 "indicator" through yesterday's close. As you can see, the broad market is still "predicting" a Kerry win, if one looks at whether YTD returns are closer to the blue "incumbent wins" or the red "incumbent loses" line:

[DuaneBidoux]

8. One of the biggest ironies of all is that over the last 50 years

of history business consistently supports Repugs but the stock market consistently does MUCH better under Dems. I think the market is down because of oil, and unlike many who suspect Arabs are conspiring to get Bush elected, I suspect they may be conspiring to make sure he doesn't get elected (just a hunch).

[louis-t]

14. I live in a state that has the largest concentration of Arabs

in the country. Spence Abraham (no relation, but from my state) had a fund-raiser this week, sort of an "Arabs for Bush" thing. 100 people showed up! My first cousin, a Farmington Hills Republican councilman, was there and was quoted in the Free Press this morning as saying "Bush has done more for Arabs than any other president". I feel like calling him up and saying "Like what? Like killing thousands of their relatives? Like locking Arabs away with no trial and no legal rights? Like torturing Arabs that we're not even sure are guilty?" Stead boy, steady, he is still family.

[Zorra]

11. Can wealthy pro-Bu$h investors artificially jack up the stock market

between now and the election?.

I bet if they did, and Bu$h "won", the market would crash so hard it will make 1929 and the following Great Depression look like the Clinton era boom.

[PROGRESSIVE1]

12. No! They do not have enough money to do so.

There are alot of Right Wing Investors out there but MOST would not take that risk of loosing their money.

[BiggJawn]

15. More "magical thinking"....

I give this about as much credibility as Sly Stallone's mom's chihuahua or whatever picking the winner.

[Toronto Ron]

16. Yeah, let's invest Social Security money in the stock market

Dumbasses.

[progressivebydesign]

17. Such BS. Remember when the Chicago traders chanted, "KERY KERY!"?

That was last month after MORE disappointing economic news.. I think about jobs. The traders were chanting Kerry, Kerry, Kerry.

I find things like that article to be so ridiculous.. the economists KNOW that Kerry will be good for AMerica.

[snippy]

20. That was when the July employment report was released which

as I recall initially showed only 32,000 jobs created in July.

[progressivebydesign]

24. Thanks for remembering!! n/t

[goforit]

18. I guess the price of Oil and the UNEMPLOYMENT doesn't have a damn

thing to do with the blithering fall!!!

A**holes!!!

[Mz Pip]

19. THe day after Kerry kicked

Bush's ass in the first debate the Dow went up 100 points.

THe Repugs would love to use scare tactics about the stock market falling if Kerry is elected but I seriously doubt a Kerry win will do any damage to it at all.

Kerry will be much better for the economy than Bush IMHO.

MzPip
:dem:

[snippy]

21. The market historically does better under democratic presidents.

The Presidential Puzzle:
Political Cycles and the Stock Market

ABSTRACT

The excess return in the stock market is higher under Democratic than
Republican presidencies: nine percent for the value-weighted and 16 percent for the equal-weighted portfolio. The difference comes from higher real stock returns and lower real interest rates,is statistically significant,and is robust in subsamples. The difference in returns is not explained by business-cycle variables related to expected returns,and is not concentrated around election dates. There is no difference in the riskiness of the stock market across
presidencies that could justify a risk premium.The difference in returns through the political cycle is therefore a puzzle.

http://www.personal.anderson.ucla.edu/rossen.valkanov/Politics.pdf

There are several other studies which show the same thing. This particular study did not include the Clinton years, if it did the differences would be even greater.

[kerouac]

22. Sell..Sell..Sell !!!! n/t

[Nicholas_J]

23. Could be

THis very same scenario, the market dropping into the 1000 group below the one it was in at the end of the Clinton Administrations that gave Bush just enough bounce in order to push Gore out of a few electoral votes.

In late August/Early September of 2000 the market dropped from above 11,000 down into the upper 10,000's which is comparable to what happened today. If this is sustained, going up again and then down, it will give a clue to many that the Bush economic plan is not sound.

Just enough to give Kerry just enough of another boost, perhaps.