Presidents and stocks: History suggests '09 could be a doozy





The nation's new president has been compared to FDR. His economic views go by the catchy code word Obamanomics. The transition of power at the White House is always a big deal on Wall Street — but never more so than this year with the stock market, banking system and economy in the throes of the worst crisis since the 1930s.

Enter President Obama, a politician with JFK-like charisma and high approval ratings. Wall Street and Main Street are counting on him to be Mr. Fix-it.

Not only has Obama inherited a financial mess of historic proportions, he is also facing what market historians at the Stock Trader's Almanac refer to as the "post-election-year syndrome": The first year of a presidential term has historically been the worst for stocks.

"In the four-year presidential cycle, the first year is usually the toughest," says Jeffrey Kleintop, strategist at LPL Financial.

In post-election years since 1871, the Standard & Poor's 500-stock index finished higher only 56% of the time, says Ned Davis Research. That's well below the 74% of gains in pre-election years, 69% in election years and 59% in midterm election years.



comments powered by Disqus

Subscribe to our mailing list