election - What We're Reading - StockBuz2024-03-28T21:53:53Zhttp://stockbuz.ning.com/articles/feed/tag/electionThe Markets Historic Returns After A Presidential Electionhttp://stockbuz.ning.com/articles/the-markets-historic-returns-after-a-presidential-election2016-11-04T22:03:23.000Z2016-11-04T22:03:23.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p>Election Day in the United States is, at last, almost here. Similar to any other major event, investors will be looking to what effect the presidential election will have on the stock market for the rest of the year and beyond. One way we can predict this movement is to analyze the historical price performance of the S&P 500 and the Dow Jones Industrial Average during past election cycles. Here we'll examine:</p>
<ul>
<li>How does the stock market perform in the final two months of presidential election years?</li>
<li>What effect does the elected political party have on stock market performance in the years following the election?</li>
<li>Which sectors are the top performers during election years and post-election?</li>
</ul>
<p><br />
<img src="http://insight.factset.com/hs-fs/hubfs/November_2016/11.03.2016%20Market%20Insight/1%29%20S&P500%20DJIA%20Prive%20Change%20Final%20Two%20Months%20of%20Election%20Years.jpg?t=1478268643387&width=1024&name=1%29%20S&P500%20DJIA%20Prive%20Change%20Final%20Two%20Months%20of%20Election%20Years.jpg" title="1) S&P500 DJIA Prive Change Final Two Months of Election Years.jpg" style="width: 1024px;" width="1024" /></p>
<h2>S&P 500 and Dow Jones Industrial Average Underperform during Election Years</h2>
<p>During presidential election years going back to 1928, the S&P 500 index has been in the positive 73% of the time (16 out of 22 years). The average price gain of the S&P 500 during election years was 7%, which trailed the 7.4% gain for the index during all years. When a Democrat was elected as President of the United States, the S&P 500 was up for the year 58% of the time (seven out of 12 years) and saw an average price increase of 3.3%. When a Republican was elected as President of the United States, the index was up for the year 90% of the time (nine out of 10 years) and posted an average price increase of 11.4%.</p>
<p>When performing this same analysis for the Dow Jones Industrial Average, we see a similar story. That is, the index tends to underperform during presidential election years when a Democrat is elected (compared to when a Republican is elected) and also underperforms during election years in general (compared to all years). This is shown in the two charts below.</p>
<p><img src="http://insight.factset.com/hs-fs/hubfs/November_2016/11.03.2016%20Market%20Insight/2%29%20S&P500%20DJIA%20Price%20Change%20%20Election%20years%201928%20to%202012.jpg?t=1478268643387&width=640&name=2%29%20S&P500%20DJIA%20Price%20Change%20%20Election%20years%201928%20to%202012.jpg" title="2) S&P500 DJIA Price Change Election years 1928 to 2012.jpg" data-constrained="true" style="width: 640px;" width="640" /></p>
<p><img src="http://insight.factset.com/hs-fs/hubfs/November_2016/11.03.2016%20Market%20Insight/3%29%20S&P500%20DJIA%20Prive%20Change%20Dem%20v%20Repub%20election%20years.%20JPG.jpg?t=1478268643387&width=640&name=3%29%20S&P500%20DJIA%20Prive%20Change%20Dem%20v%20Repub%20election%20years.%20JPG.jpg" title="3) S&P500 DJIA Prive Change Dem v Repub election years. JPG.jpg" data-constrained="true" style="width: 640px;" width="640" /></p>
<h2>What Does History Indicate about the Final Two Months of Election Years?</h2>
<p>As of close on November 1, the S&P 500 is up 3.3% year-to-date. Looking at the final two months of presidential election years going back to 1928, the S&P 500 index gained in value 64% of the time (14 out of 22 years). The average price increase was 1.9%, which trailed the 2.1% average increase in the final two months of all years.</p>
<p>When a Democrat was elected as president, the S&P 500 posted an average price gain of 0.6% (during the final two months of election years), which was well-below the 3.6% average gain when a Republican was elected. When performing this same analysis for the Dow Jones Industrial Average, the average price increase in the final two months of election years actually exceeded the average gain in the final two months of all years by 0.3 percentage points. The effect that the elected political party had on the Dow’s price movement was consistent with that of the S&P 500 index.  </p>
<p><img src="http://insight.factset.com/hs-fs/hubfs/November_2016/11.03.2016%20Market%20Insight/4%29%20SP500%20v%20DJIA%20last%202%20months%20of%20election%20year.jpg?t=1478268643387&width=640&name=4%29%20SP500%20v%20DJIA%20last%202%20months%20of%20election%20year.jpg" title="4) SP500 v DJIA last 2 months of election year.jpg" data-constrained="true" style="width: 640px;" width="640" /></p>
<p><img src="http://insight.factset.com/hs-fs/hubfs/November_2016/11.03.2016%20Market%20Insight/5%29%20SP500%20v%20DJIA%20last%202%20months%20of%20election%20year%20dem%20v%20republican.jpg?t=1478268643387&width=640&name=5%29%20SP500%20v%20DJIA%20last%202%20months%20of%20election%20year%20dem%20v%20republican.jpg" title="5) SP500 v DJIA last 2 months of election year dem v republican.jpg" data-constrained="true" style="width: 640px;" width="640" /></p>
<h2>Post-Election Years: Third Year after the Election is a Charm</h2>
<p>Looking at the first year after the presidential election (going back to 1928), the S&P 500 index has increased in value 55% of the time (12 out of 22 years), with the average price gain amounting to 5.1%. When a Democrat was elected president, the S&P 500 was in the positive during the first post-election year 75% of the time (nine out of 12 years), with the average price increase equaling 11.7%.</p>
<p>When a Republican was elected president, the index was in the positive only 30% of the time (three out of 10 years), with the average price change amounting to -2.8%. Keep in mind that this represents a stark contrast to the price change for the S&P 500 during election years, when a Democrat was elected versus a Republican. In election years, when a Democrat was elected as President of the United States, the S&P 500 underperformed (compared to when a Republican was elected) on average by 8.1 percentage points.</p>
<p>As shown in the chart below, the third post-election year experienced the largest price gain for the S&P 500 on average. During the third year after the presidential election, the S&P 500 increased 12.8% on average, which exceeded the 7.4% annual gain for all years (going back to 1928). No other post-election year logged an average percentage increase that beat the 7.4% watermark.</p>
<p><img src="http://insight.factset.com/hs-fs/hubfs/November_2016/11.03.2016%20Market%20Insight/6%29%20SP500%20price%20increase%20post%20election%20year.jpg?t=1478268643387&width=640&name=6%29%20SP500%20price%20increase%20post%20election%20year.jpg" title="6) SP500 price increase post election year.jpg" style="width: 640px;" width="640" /></p>
<h2>S&P 500 Favors Democrat to New Democrat President Transition over Democrat to Republican</h2>
<p>From a political continuity perspective, a Hillary Clinton win would be better for the market in the first year after the election, based on history. On average, the S&P 500 index increased in value by 9.8% in the first post-election year when the political party of the president transitioned from a Democrat to a new Democrat. Keep in mind, though, that this has only occurred twice since 1928.</p>
<p>Contrastingly, the S&P 500 decreased in value by 10.2% on average in the first post-election year when the political party of the president shifted from a Democrat to a Republican. This has occurred four times since 1928. It is interesting to note that in the second and third years after the election, the Democrat to new Democrat transition underperformed the Democrat to Republican shift.</p>
<p><img src="http://insight.factset.com/hs-fs/hubfs/November_2016/11.03.2016%20Market%20Insight/7%29PolticalContinuity.jpg?t=1478268643387&width=640&name=7%29PolticalContinuity.jpg" title="7)PolticalContinuity.jpg" style="width: 640px;" width="640" /></p>
<h2>Consumer Discretionary has been Best Performing Sector in Post-Election Year</h2>
<p>Looking at post-election years going back to 1992 (when all S&P 500 sector data is available), the S&P 500 index still performed best in the third year following the presidential election. At the sector level, the Financials group saw the largest price gain during election years, posting an 8.8% average jump. The Telecom, Information Technology, and Materials sectors were the only groups to log an average price decline during election years. </p>
<p>In the first post-election year, all S&P 500 sectors saw an average price increase, with the Consumer Discretionary group leading the way (+19.9%).  The Information Technology sector led all groups in terms of price performance for the second and third years after Presidential elections.  Once again, all S&P 500 sectors posted a price gain on average during these years. </p>
<p><img src="http://insight.factset.com/hs-fs/hubfs/November_2016/11.03.2016%20Market%20Insight/8%29%20Price%20Changes%20by%20Sector.jpg?t=1478268643387&width=640&name=8%29%20Price%20Changes%20by%20Sector.jpg" title="8) Price Changes by Sector.jpg" data-constrained="true" style="width: 640px;" width="640" /></p>
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Courtesy of <a href="http://insight.factset.com/third-year-after-presidential-election-charm-for-sp-500?utm_source=hs_email&utm_medium=email&utm_content=37047197&_hsenc=p2ANqtz-9oUKjZHAHPJlCejsIuFBHe5f-ubL75K2pJqELTEDk8wlll_ofOCiaz2UD5nExU1fzIKfJzqvU9Q9Yvk38n-2gDpdlGqA&_hsmi=37047197" target="_blank">FactSet</a></div>
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</div>If The Scots Divorce, It Could Easily Bode For Morehttp://stockbuz.ning.com/articles/if-the-scots-divorce-it-could-easily-bode-for-more2014-09-10T18:29:25.000Z2014-09-10T18:29:25.000ZStockBuzhttp://stockbuz.ning.com/members/1t2xbcvddkrir<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290856?profile=original"><img class="align-left" src="http://storage.ning.com/topology/rest/1.0/file/get/1290856?profile=original" width="300"></a>Polls released this week showed for the first time that a majority – an extremely small majority, but a majority nonetheless – of Scots favor independence, although other polls suggest the no camp remains in the lead. A poll is not the election, which will be held Sept. 18, but it is still a warning that something extraordinary might happen very soon. The political union between Scotland and England might be abolished after 300 years. The implications of this are enormous and generally ignored.</p>
<p>Obviously, this raises a host of question about how such a divorce might take place, whether the expected time frame – divorce by 2016 – will be adhered to, and how state property might be divided. It also raises the question of Scottish foreign policy. Will Scotland remain in NATO? Will it have membership in the European Union? Will it continue to use the pound sterling, and if not, how will it roll out its own currency?</p>
<p>These are important questions, but far more important issues will follow. One of the principles of the postwar world was the inviolability of Europe's borders. Border disputes were the origin of centuries of war, and so Europe's borders were frozen after World War II to avoid discussion. This may have left some people of one nationality on the wrong side of a border, but this was accepted since the risk of opening the door to border redefinition was considered far greater than any discomforts stemming from the borders that were locked in place.</p>
<p>This principle has been weakened since the end of the Cold War. Still, though the disintegration of the Soviet Union created fully independent states, these were recognized republics within the context of the Soviet Union. One could argue that this did not in fact represent border change. Later, the "Velvet Divorce" of Czechoslovakia into Czech and Slovak successor countries represented another shift, but in a country that had only existed since the end of World War I. The separation of Kosovo from Serbia was a more radical shift but was justified by claims of Serbian oppression. Though each shift weakened the principle of inviolable borders, each came with an asterisk – that is, each had an aspect that stopped it from being the definitive case.</p>
<p>Scotland separating from England, by contrast, can't be minimized. If that centuries-old union can be revised, then anything can be revised. Scottish separatists' reason for splitting is that they are a separate nation, that each nation has the right to its own state and the right to determine its own destiny, and that they no longer choose to be in union. But if they have the right to determine this, why shouldn't others in Europe enjoy the same right?</p>
<p>For example, modern Spain is an amalgam of regions. One, the Catalan region – which contains Barcelona – has a strong separatist movement. If Scotland can leave the United Kingdom, then why shouldn't Catalonia be allowed to leave Spain? Farther east, the Treaty of Trianon gave Romania and then-Czechoslovakia large portions of Hungary along with the Hungarians living there. Why shouldn't Hungarians living in those territories have the right to rejoin Hungary? Meanwhile, if French-speaking Belgians and Dutch-speaking Belgians wish to part ways and return their two regions to their respective countries of origin, why should they not be allowed to? And why shouldn't the eastern part of Ukraine be allowed to secede and join Russia?</p>
<p>Raising the stakes, this is an issue that goes far beyond Europe. There are seemingly innumerable separatist movements in India, China, Africa and so forth. If Scotland has the right to leave the nation-state it is part of and form a new one based on ethnic identity, why can't anyone follow suit? And if anyone can do it, but they are blocked by the state they wish to leave, is resorting to violence in pursuit of independence legitimate?</p>
<p>The Scottish issue – the claim that the Scots are a separate nation and that all nations have a right to self-determination – simply cannot be asterisked. Having this happen in the heart of Western Europe would set a clear precedent that would expand geographically and conceptually. It would legitimize similar movements globally and force a reconsideration of what a nation is. Ultimately, a nation would be whatever the majority says it is.</p>
<p>It is doubtful that the Scottish precedent could be contained in Europe. And it is hard to imagine how this precedent might not lead to conflict somewhere, not in the British Isles but somewhere where the existing state would be less inclined to grant the right of self-determination to a separatist movement.</p>
<p>Of course, the separatists in Scotland may well lose, sentiment might change in the post-election negotiations, and so on. But if England and Scotland divorce, the right to separate will become an integral part of international custom – and it will arouse other movements.</p>
<p>Courtesy of <a href="http://email.mauldineconomics.com/wf/click?upn=n5W239CQZ-2BNzU8IvtdMtix6OI2jTCxm5e82ofXRPOIY-2BQFEy8PicvDArWs-2Bt4MZ1PrAGKYTOoi0wsQWS-2BCCfYPNDtEHof315bQKvnXRDhQw-3D_JKLR1FBU0q0IqxJGrTtbPy0jh07eeWdb9hfaEUCFT-2BLuv-2B1QL5c4-2FOPebXXaMS40ehsCqaZCC4P-2B6ZSFJLf2td4J3ZEKJ5YdCc5Wxc9gmyC7PYU7Fp39oQNCykQCMuMEE1sx1DztBlzTWchAe2g0oRHe0p3dIbJG75Y4r4V9YrWD8-2FDtsu-2FWVNuL2DgN02KlsIoJZWwan9x-2FNtFQBj6H-2FeJCalgyE-2BQPVWT2W-2FxbnpkxojSYXXpNQvXKoviCtJq3" target="_blank">Mauldin Economics</a></p></div>