May

29

Financial Analyst Journal, Vol. 26 No.2, pages 111-113:

The above Tables I and II […] show that the traditional Wall Street belief concerning the market's preference for Republicans is in accord with observed market movements surrounding Election Day.

If this Republican bias were justified, one would expect the market to perform significantly better during a Republican administration than during a Democratic one. To test this hypothesis, we looked at every year since 1897 and classified it by party in power and by its yearly position in the administration. The following table summarizes the results:

Year Republican Democratic
1    6.88%   10.35%
2   10.18%   -1.21%
3   -6.84%   20.76%
4    7.15%    3.50%

There appear to be no systematic differences in the performance of the market during Republican and Democratic administrations, except that during the third year of Democratic administrations the market performs significantly better than during the third year of Republican administrations. Thus, there appears to be no long term pattern in market movements which would justify Wall Street's Republican bias.

For those who would like to know: This article was written by Victor Niederhoffer, Steven Gibbs and Jim Bullock. It was published in the March-April 1970 issue of FAJ.

Zubin Al Genubi comments:

This year is on track with regularity. Will next year be up big contrary to all the bearish pundits?


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