How do elections impact your money?

There’s some great research regarding politics and investing. I’ll share that with you in a moment. Now, I want to share some research I performed.

The divisive topic every four years is what party will get into the White House and mess up the markets? So, I looked at the Dow Jones Industrial Average the day before the election, the day after and the last trading day of that year. I excluded reelections since that president is old news by then.

Here’s the performance the day before versus the day after the elections.

1988: George H.W. Bush: 7 points up (0.3 percent)

1992: Bill Clinton: 39 points up (1.2 percent)

2000: George W. Bush: 70 points down (0.6 percent)

2008: Barack Obama: 181 points down (1.9 percent)

You’ll notice that the points get bigger and bigger. That’s because the DJIA went from 2,125 up to a high of 10,977. The percentage gain or loss is more telling.

For the year-end it was mixed, too. Both parties had ups and down. Most were fairly small moves with one exception.

George H.W. Bush: up 2 percent

Bill Clinton: up 1.2 percent

George W. Bush: down 1.7 percent

Barack Obama: down 5.8 percent

THE CURSE OF THE HANGING CHAD

There are some caveats on both sides of the aisle. George W. Bush really had two pre- and post- election days. If you’ll remember, it all came down to the Florida electoral votes and that came down to hanging chads and how votes were counted.

 On Dec. 12, a Tuesday, the Supreme Court decided in W’s favor. Both days, one in November and one in December, had almost identical point and percent drops. Seventy points and 68 points, respectively. Both days dropped 0.6 percent.

For President Obama, arguably, the downturn was truly exceptional. Our nation was in the middle of the Great Recession. We all know how devastating that was to the economy, markets and our livelihoods.

THE OTHER RESEARCH

The numbers I found from Oppenheimer Funds say that a mixed government, both Democrats and Republicans in power, provided a 7 percent stock return each year from 1901 to 2014. When one party controlled all of Congress and the White House, stock performance was much lower, 4.6 percent annually.

That shows me that our founding fathers were onto something when they built our system. A mixture of opinions and passions can lead to good end results ― at least in the markets.