Tabell’s Market Letter – October 17, 1980

TABELL'S MARKET LETTER 909 STATE ROAD. PRINCETON. NEW JERSEY 08540 DIV'SION OF MEMBER NEW VORK STOCK EXCHANGE, tNC MEMBER AMERICAN STOCK EXCHANGE October 17, 1980 – —We have as 'we ….skeEl-ftt what –I the most likely course Jor the 'siock market assuming one Presiaimtial candidate or tlie-other is elected next month. Very often the asker of this question is an avid Republican or Democrat who is interested in proving the thesis that his party offers the better hope for the market and lor the economy. Presented below are some statistics which should please partisans of neither stripe. The table shows the percentage change in the stock market for one, two, three, and six-month periods and one, two, three, and four-year periods following the October close of each Presidential election year since 1900. Summarized at the bottom of the table are a number of averages. The first shows the average percentage change in the market for all years since 1897 over the periods in question. The second shows the average change for the various periods following election years. Following this are averages for periods following election years which elected a) a Republican, and b) a Democrat; and periods following election years in which a) the incumbent party was returned to power, and b) a new party was installed in power. PER C E N T C HAN G E 0 V E R YEAR PRESIDENT PTY 1 MNTH 2 MNTH 3 MNTH 6 MNTH 1 YEAR 2 YEAR 3 YEAR 4 YEAR I900 Mcklnley 12.79 19.77 13.16 28.39 9.16 11.89 -23.56 6.76 1904 Roosevelt R 14.26 10.44 13.17 20.70 32.91 47.41 -8.46 30.94 1908 Taft 1912 Wilson R 5.78 4.39 1.89 6.98 20.04 2.71 -8.17 9.91 D 1.36 -3.13 -7.71 -13.42 -13.68 -21.27 44.50 57.42 1916 Wilson D 1.30 -9.19 -8.78 -10.88 -28.78 -18.26 13.68 -18.79 1920 Harding 1924 Coolidge R -10.49 -15.30 -10.38 -7.19 -13.82 13.14 4.21 22.50 R 7.03 15.81 18.41 15.33 50.41 44.51 74.64 142.32 1928 Hoover R 16.35 18.97 25.92 26.62 8.47 -27.29 -58.19 -75.45 1932 Roosevelt 1936 Roosevelt D -8.97 -3.18 -1.62 25.46 42.42 50.82 125.75 186.25 D 3.40 1.53 4.83 -1.65 -22.02 -14.37 -14.28 -24.03 .59 -7 79 .-13 I 2.4–1.5 .262.22-B1l.6 1944 Roosevelt D 0.55 3.95 4.87 12.91 27.35 15.44 23.65 28.72 1948 Truman D -9.24 -6.00 -5.04 -7.67 0.49 19.29 39.09 42.74 1952 Eisenhower R 5.36 8.42 7.63 2.05 2.44 30.80 68.95 78.23 1956 Eisenhower R -1.47 4.09 -0.14 3.02 -8.09 13.21 34.75 20.95 1960 Kennedy D 2.91 6.12 11.69 16.95 21.29 1.62 30.13 50.44 1964 Johnson D 0.27 0.12 3.41 5.64 10.05 -7.56 0.76 9.08 1968 Nixon R 3.43 -0.91 -0.67 -0.23 -10.12 -20.66 -11.91 0.33 1972 Nixon 1976 Carter AVERAGES R 6.56 6.75 4.55 -3.57 0.11 -30.38 -12.50 0.98 D -1.84 4.12 -1.09 -3.94 -15.19 -17.87 -15.47 -3.37 All Years Election Years 0.52 1.96 2.94 4.27 6.46 12.98 17.68 23.92 2.33 3.21 3.32 5.07 5.05 3.90 15.52 28.74 Repub. Elected Dem. Elected 5.96 7.24 7.35 9.21 9.15 8.53 5.98 23.75 -1.29 -0.82 -0.72 0.92 0.94 -0.74 25.05 33.73 Incum. Re'lcted 4.22 5.23 5.27 6.28 6.74 3.18 4.93 14.08 New Party -1.18 -0.55 -0.31 2.81 1.91 5.23 35.17 55.97 The line showing average performance for all election years tends to suggest a positive outlook from now until early 1981. One, two, and three-month periods following October in election years are significantly better than the average of all years. On the other hand, the same line demonstrates that the first halves of Presidential terms tend to show below-average stock market results, as demonstrated by the sub-par one and two-year performances following past Octobers when a Presidential election was held. Republicans will be delighted to know that, for the first two years of a Presidential term, the stock mar- ket tends to perform considerably better if a Republican is elected than if a Democrat is elected. Democrats, on the other hand J will not be reluctant to point out that, over three and four-year periods following elections, the market has acted considerably better under Democratic administrations than under the GOP. Before either party draws much comfort from these statistics, however, it should also be pointed out that the market tenqs to perform well over the short term when the incumbent party is returned, but poorly over the longer them. By contrast, the instaUation of a new party tends to produce poor short-term stock-market results but very good stock markets over the first three years and the four years of the new President's term. The election of Mr. Reagan, in other words, should be bullish for the short term and bearish for the long term since he is a Republican, but just the opposite since he will, if elected, be replacing an incumbent Presi- dent. Mr. Carter's election, by contrast, may be viewed as bearish for the short term since he is a Democrat but also bullish for the shari term since he is the incumbent. His party makes the long-range outlook follow- ing his election optimistic, but his incumbency suggests the opposite view. None of this. we are afraid, seems to prove very much except that the stock market is a complex beast. As noted, we doubt that partisans of either side can draw much ammunition from the above statistics. Dow-Jones Industrials (12 00 PM) S & P Composite (1200 PM Cumulative Index (10116180) AWT sla 957.42 131. 87 1025.46 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL No statement or expression of opinion or ony other matter herein contained IS, or IS to be deemed to be, directly or Indirectly, on offer or the soliCitation of on offer to buy or sell ony security referred to or mentioned The molter IS presented merely for the COnVcr'lenC(I of the subscnber While lie believe the sources of our Informa- tion to be reliable, we In no way represent or guarantee the accuracy thereof nor of the slalem('nlS mude herein Any action to be loken by the subSCriber should be based on hiS own Inve5gollon and information Janney Montgomery Scali, Inc, os a corpOfOllC)n, and Its offICers or employees, may now have, or may later loke. pos.hons or lrades In respect 10 any menl10ned In IhlS or any future ond such moy be different from any views now or hereafter expressed In or any other Inue Janney Monlgomery Scott, Inc, whICh IS registered With the SEC as on Investment adVisor, may give odvlCe to lis ,vestment advltory and other customers ,dependently of any statements mode, thiS or In any other Issue Furlher information on any sectmty mentioned herein available on request