If History Is Any Indication, Prepare For a Sizable Upswing In the Markets Over The Next Two Years





Illustration of the first half of the presidential termA reader of this site sent me an email the other day that asked:

"How have the DJIA, NASDAQ and SP 500 historically performed in the second half of a president's term?"

Instead of just responding to the reader, I thought that I would make the answer into its own post.

I performed the calculations for the post-WWII era (1946-2009). Our S&P 500 data goes back to 1950, while our NASDAQ data goes back to 1971.

Here is the raw data:

DJIA

Avg. Annual Performance in First Half of Presidential Term: +4.91%
Total Number of Years: 32

Avg. Annual Performance in Second Half of Presidential Term: +10.46%
Total Number of Years: 32

NASDAQ

Avg. Annual Performance in First Half of Presidential Term: +4.43%
Total Number of Years: 19

Avg. Annual Performance in Second Half of Presidential Term: +18.14%
Total Number of Years: 20

S&P 500

Avg. Annual Performance in First Half of Presidential Term: +4.47%
Total Number of Years: 30

Avg. Annual Performance in Second Half of Presidential Term: +12.18%
Total Number of Years: 30

--

You can speculate as to the reasons behind this phenomenon, but the data is pretty clear - the markets perform markedly better in the last two years of a presidential term compared to the first two years.

Sources: Historical Dow Data, Historical Nasdaq Data, Historical S&P 500 Data




Filed under: General Knowledge

Related Articles