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

A 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

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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