Markets Performance after Election: One Year Update

Last week we crossed the one year mark after president’s election. Both in calendar days, November the 8th, and in terms of trading days – 252 (the average number of trading days per calendar year). I wanted to do a brief recap before leaving it to rest.

October is known to be a bad month on average for equities. It did impact significantly our “race” as well. About three weeks ago, we saw the President Clinton’s 2nd term rally and President H.W. Bush’s holding the top spots. By a considerable margin. Nevertheless, just a week later, we saw President Bush’s rally losing its second spot due to Friday the 13th mini-crash. The very next week, President Clinton’s market suffered its own mini-crash and gave away a substantial number of percentage points. So …

No significant turbulence for the current rally in October, and with a healthy 28% it crossed the one year mark on top.

A couple of points on the methodology (please review the R code if interested):

  • I use day count since election to overlap the rallies, not calendar dates.

  • The Dow Jones Industrial Average is the data I used. The performance on the S&P 500 is different.

The current market rally is in fact the 2nd best ever, going back to 1928. President Roosevelt’s rally dwarfs anything in modern history:

The last chart is pretty convincing – something crazy was going on in 1932. And Indeed, the market was simply starting to bounce back from the bottom of the devastating great depression, the biggest market collapse. To get a perspective:

Yep, that “little” blip at the end is the enormous 46% rally during President’s Roosevelt’s first year in office. In fact, it will take another 22 years before the market reaches a new high! For comparison, both the current rally and President Clinton’s rally have been operating in record high territory.