Forecasters Look For Hints of Election Results
By Jerry Knight
Monday, July 26, 2004; Page E01
Warren Harding. Calvin Coolidge. Herbert Hoover. Jimmy Carter.
George W. Bush?
The stock market fell during those president's terms and all four became one-term presidents.
That precedent, at least according to Wall Street folklore, doesn't bode well for Bush. The Standard & Poor's 500-stock index has fallen 19 percent since he was inaugurated in January 2001.
Whether stocks go up or down during the first four months of an election year is also supposed to predict who wins or loses, another bad omen for the president. Others on Wall Street say you can pick the president based on the market's performance from New Year's Eve to election eve, or between the end of the second political convention and the election.
Most political scientists dismiss such theories as voodoo. But, they insist, if you put enough academics in front of enough computers, eventually one of them will come up with a sophisticated economic formula that will predict elections.
This year's election pits the folklorists against these formula writers, or -- as they prefer to be called -- economic modelers.
Most of the models call for a Bush victory based on such factors as the advantage of being the incumbent, polls, economic growth statistics and the employment picture.
In the stock market, though, the stars align in the opposite direction, pointing to the inauguration of Democrat John F. Kerry. The Dow Jones industrial average and the S&P 500 fell during the first four months of 2004 and are still down for the year.
Jeff Hirsch, editor of the Stock Trader's Almanac, cites the correlation between market performance in the first four months of the year and election results. "Of the six times the market has declined in the first four months of the year, five times the incumbent parties were ousted," he said. The incumbent party, rather than the incumbent president, is tracked to take into account people who aren't running for reelection.
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