By the Numbers: Blue Chips and Ballots

Election years have generated relatively modest returns for the Dow Jones Industrial Average (DJIA)

Andrea Kramer
Dec 31, 2015 at 2:15 PM
facebook twitter linkedin


Since 1949, 81% of election years -- the fourth year in a presidential cycle -- have been positive for the S&P 500 Index (SPX), as Schaeffer's Senior VP of Research Todd Salamone pointed out in the latest installment of Monday Morning Outlook. The S&P has averaged a gain of 6.6% during this time frame, and soared 13.4% in 2012, the last election year. But what about the Dow Jones Industrial Average (DJIA)

As with the S&P, the third year of a presidential cycle is hands-down the best. According to Schaeffer's Senior Quantitative Analyst Rocky White, the Dow has ended higher 94% of the time since 1949, averaging a gain of 15.8%, but is on pace to break that streak in 2015

In the fourth year of a presidential cycle, the blue-chip barometer has ended higher three out of four times. However, this year in the cycle has generated the slimmest returns, with an average of 4.8% and a median return of just 5.8%. This is also the only year when the average negative exceeds the average positive -- 13.3% to 10.8%, respectively.

151231DowPC2

151231DOWPC3


Breaking it down even more, though, the greatest odds of a positive second-half finish are in the last six months of an election year. Specifically, the Dow has been positive 81% of the time since 1949, compared to 63% of the time in the first half of election years. The average second-half return is the slimmest, however, at just 2.7%.

151231DOWPC4

Meanwhile, what can we expect on the 2016 volatility front? Take those TV pundits with a grain of salt, Schaeffer's contributor Adam Warner recently warned.

A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 

Partnercenter