Wall Street History

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Wall Street History

12/12/2003

Update: Presidential Elections and Equity Returns

I thought I would update a piece I did six months ago, 6/13,
concerning market returns for the year before a presidential
election and election year itself. Historically, the numbers have
painted a powerful picture and 2003 has been no exception to
the pattern.

Of course the biggest reason for the positive bias is the fact that
Congress and the administration are typically priming the fiscal
pumps to ensure that all of us feel good when we enter the voting
booth. Most eras, “It’s about the economy, stupid,” has a truthful
ring to it.

I’ll save my own forecast for 2004 for a future “Week in
Review.” For now, hopefully you have participated in the strong
market in ’03. I was far too conservative myself.

Year ..S&P 500 ..Small Caps

2004 ?....................?.......
2003 ...+20.4* .+51.6%*

2000 -9.1%..........-3.6%
1999 ...+21.1%.......+29.8%

1996 ...+23.1%.......+17.6%
1995 ...+37.4%.......+34.5%

1992 +7.7%........+23.4%
1991 ...+30.6%.......+44.6%

1988 ...+16.8%.......+22.9%
1987 +5.2%.........-9.3%

1984 +6.3%.........-6.7%
1983 ...+22.5%.......+39.7%

1980 ...+32.4%.......+39.9%
1979 ...+18.4%.......+43.5%

1976 +23.8%......+57.4%
1975 +37.2%......+52.8%

1972 +19.0%......+4.4%
1971 +14.3%......+16.5%

1968 +11.1%......+36.0%
1967 +24.0%......+83.6%

1964 +16.5%......+23.5%
1963 +22.8%......+23.6%

1960 ..+0.5 ..-3.3%
1959 +12.0%......+16.4%

1956 .+6.6%........+4.3%
1955 +31.6%.....+20.4%

1952 +18.4%......+3.0%
1951 +24.0%......+7.8%

1948 +5.5%........-2.1%
1947 +5.7%........+0.9%

1944 ...+19.8%......+53.7%
1943 ...+25.9%......+88.4%

1940 ....-9.8%.........-5.2%
1939 -0.4%........+0.4%

1936 +33.9%.....+64.8%
1935 +47.7%.....+40.2%

*Returns as of December 10. Small cap return represented by
DFA Micro Cap Fund. Russell 2000 is up +38.0%, year-to-date,
thru 12/10.

[Source: Ibbotson Associates / 2003 Yearbook]

Ibbotson has employed various indices in calculating small cap
returns since 1926, namely the fifth capitalization quintile of
stocks on the New York Stock Exchange for 1926-81,
Dimensional Fund Advisors’ Small Company Fund, 1982-2001,
and, since April 2001, the DFA Micro Cap Fund.

Wall Street History will return 12/19 the story of Tino
De Angelis

Brian Trumbore

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