One on One with Jeffrey Hirsch, Editor in Chief of the "Stock Trader's Almanac"
Tuesday, November 04, 2008
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SUSIE GHARIB: And how will the stock market perform under a Republican or Democratic president? Our guest tonight has made a career of answering that question. Joining us now, Jeffrey Hirsch, editor in chief of the "Stock Trader's Almanac." Hi, Jeff.
JEFFREY HIRSCH, EDITOR IN CHIEF, STOCK TRADER'S ALMANAC: How are you doing Susie?
GHARIB: I'm good. So how will the stock market do tomorrow if McCain wins or if Obama is the victor.
HIRSCH: Post election day has been pretty negative overall and you really don't see much of a pattern on whether it's a Democrat or Republican or incumbent winner. It's just not been a great day, at best 50-50 up and 50 down. So I wouldn't expect too much tomorrow.
GHARIB: How about in the first term of a president, if it's a Democrat in the White House versus a Republican in the White House, how do the markets perform?
HIRSCH: The first year of the post election year as we call it has been better under Democrats. We've had some decent gains. Only Carter had a really bad first year and then Republicans have fared much worse with about a 1 or 2 percent average loss for the post election year since Eisenhower.
GHARIB: Jeff, I'm sure you've heard this all the time that Wall Street prefers for the markets they say will do better under gridlock. That's having a Democrat in the White House, for example and a Republican Congress or vice versa. Is that historically true?
HIRSCH: It's been more true for a Democratic president and a Republican Congress. The combination of Republican presidents and Democratic Congresses have not been that great. Democratic Congresses themselves have presided over weaker market returns.
GHARIB: Jeff, I know you've been studying these trends with presidents and elections since looking back to the 1940's. But given that we're going through an unprecedented financial crisis, can this throw off all these election patterns that you've studied over the years?
HIRSCH: I think they're more the bull market of the 90's threw it off where everything was pretty much straight up. But this start of fits into the four year cycle, where aside from having a bear market year in an election year, when you do have that, you're looking at the change of party in power and you're also looking at the potential for the first two years as they normally are to be rather weak. We normally have recessions in bear markets and wars that begin in those first years. And here we have a lot of serious issues going on and the reason it's so negative is that presidents deal with all the tough issues first and here we have some tough issues that are tougher than most.
GHARIB: You wrote in your almanac for the November page that November is much better in election years when the incumbent is ousted. So if Obama wins, is that a positive for the markets at least for November, right?
HIRSCH: I think so. What you're dealing with is September and October down, you're having a rally already begun here, you're dealing with a Wall Street that they don't really know and a Main Street that's really disappointed in the current administration, the current party in power. And there's usually a celebration of that, what I call a ding dong the witch is dead effect, when you have a change of party and November has been up about 2.5 percent in the S&P since '44.
GHARIB: Thanks a lot, we'll find out tomorrow how all of this plays out. Thank you so much for coming on the program tonight.
HIRSCH: My pleasure, thank you.
GHARIB: My guest tonight, Jeffrey Hirsch, editor in chief of the "Stock Trader's Almanac."
