Can Trump confound history?
Bear markets tend to start in a president’s first two years, and right now uncertainty rules, writes Michel Pireu
Donald Trump was sworn in as the 45th president of the US on Friday. Whenever there’s a new president, you get a lot of breathless commentary about how he’ll ruin or save the markets. What follows is our pick of these, but first a bit of history. According to the Stock Trader’s Almanac, in the past 182 years bear markets and recessions have tended to start in the first two years of a president’s term; bull markets and prosperous times mark the latter half. Since 1833, the Dow Jones industrial average has gained an average of 10.4% in the year before a presidential election and about 6% in the election year. By contrast, the first and second years of a president’s term see average gains of 2.5% and 4.2%, respectively. A notable exception: 2008, when the Dow sank nearly 34%. It then racked up an impressive 27% in the first year of Barack Obama’s second term and 7.5% in the second year. Conventional wisdom might suggest that Republicans, who are supposedly more business-friendly than D...
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