[thegmanifesto]

While Republicans promote themselves as the friendliest party for Wall Street, stock investors do better when Democrats occupy the White House. From a dollars- and-cents standpoint, it’s not even close.

The BGOV Barometer shows that, over the five decades since John F. Kennedy was inaugurated, $1,000 invested in a hypothetical fund that tracks the Standard & Poor’s 500 Index (SPX) only when Democrats are in the White House would have been worth $10,920 at the close of trading yesterday.

That’s more than nine times the dollar return an investor would have realized from following a similar strategy during Republican administrations. A $1,000 stake invested in a fund that followed the S&P 500 under Republican presidents, starting with Richard Nixon, would have grown to $2,087 on the day George W. Bush left office.

http://www.bloomberg.com/news/2012-02-22...meter.html

[gringochileno]

I'm no fan of the Republicans but I don't think this is a very strong argument. Correlation doesn't imply causation. At best, it shows that Democratic policies don't seem to have measurably negative effects on the stock market.

[thegmanifesto]

(02-29-2012 10:13 PM)gringochileno Wrote:  

I'm no fan of the Republicans but I don't think this is a very strong argument. Correlation doesn't imply causation. At best, it shows that Democratic policies don't seem to have measurably negative effects on the stock market.

I am not a fan of Republicans or Democrats.

However, let's say you go to nightclub #1 and it is 90% guys three times in a row.

And then you go to nightclub #2 and it is 90% fly girls four times in a row.

Which nightclub are you going back to?

[MikeCF]

The chart makes sense.

Contrary to popular belief, investing in the stock market is not how the rich make their money.

The rich keep their money by having their taxes cut.

A robust stock market is good for middle class earners who have been contributing to their 401k's for years. (Pension funds, too.)

Republicans do whatever they can to cut taxes on the already-rich. Republicans do not want anyone else getting rich.

Republicans are the ultimate haters.

[All or Nothing]

(03-01-2012 12:15 AM)MikeCF Wrote:  

The chart makes sense.

Contrary to popular belief, investing in the stock market is not how the rich make their money.

The rich keep their money by having their taxes cut.

A robust stock market is good for middle class earners who have been contributing to their 401k's for years. (Pension funds, too.)

Republicans do whatever they can to cut taxes on the already-rich. Republicans do not want anyone else getting rich.

Republicans are the ultimate haters.

I don't think that is the whole story. My thoughts are that the Republican officials are heavily influenced by super wealthy white people.

The only problem with this is that super wealthy white people are a minute part of the population. So, the republicans appeal to average white guy in order to get votes and become elected. Then they turn around and feed the hand that finances their campaigns.

I don't know if that's exactly clear since I'm having trouble writing down my musings, but that's the basic premise of my ideas.

[gringochileno]

(02-29-2012 10:29 PM)thegmanifesto Wrote:  

(02-29-2012 10:13 PM)gringochileno Wrote:  

I'm no fan of the Republicans but I don't think this is a very strong argument. Correlation doesn't imply causation. At best, it shows that Democratic policies don't seem to have measurably negative effects on the stock market.

I am not a fan of Republicans or Democrats.

However, let's say you go to nightclub #1 and it is 90% guys three times in a row.

And then you go to nightclub #2 and it is 90% fly girls four times in a row.

Which nightclub are you going back to?

Bad analogy. Your nightclub example is unlikely to be coincidence. In the chart, however, most of the Democratic presidents' lead is due to the 1990s Clinton-era boom and Obama's presidency thus far, which started out near the bottom of one of the worst periods for the stock market in history. If you took those away there wouldn't be a significant difference, which tells me that the more plausible explanation is probably chance due to a low sample size, especially since there's relatively little that a President can do to affect economic performance.

Moreover, I'm surprised that you believe there's such a huge difference in the effects of Democratic and Republican economic policies. Haven't you argued that the two parties' objectives are basically the same?

[thegmanifesto]

(03-01-2012 12:51 AM)gringochileno Wrote:  

(02-29-2012 10:29 PM)thegmanifesto Wrote:  

(02-29-2012 10:13 PM)gringochileno Wrote:  

I'm no fan of the Republicans but I don't think this is a very strong argument. Correlation doesn't imply causation. At best, it shows that Democratic policies don't seem to have measurably negative effects on the stock market.

I am not a fan of Republicans or Democrats.

However, let's say you go to nightclub #1 and it is 90% guys three times in a row.

And then you go to nightclub #2 and it is 90% fly girls four times in a row.

Which nightclub are you going back to?

Bad analogy. Your nightclub example is unlikely to be coincidence.

Let me improve on it then so you can follow:

I am not a fan of Republicans or Democrats.

However, let's say you go to a nightclub with promoter #1 and it is 90% guys three times in a row.

And then you go to the same nightclub with promoter #2 and it is 90% fly girls four times in a row.

Are you going to that nightclub on a night with promoter #1 or promoter #2?

Feel better?

[gringochileno]

(03-01-2012 12:58 AM)thegmanifesto Wrote:  

(03-01-2012 12:51 AM)gringochileno Wrote:  

(02-29-2012 10:29 PM)thegmanifesto Wrote:  

(02-29-2012 10:13 PM)gringochileno Wrote:  

I'm no fan of the Republicans but I don't think this is a very strong argument. Correlation doesn't imply causation. At best, it shows that Democratic policies don't seem to have measurably negative effects on the stock market.

I am not a fan of Republicans or Democrats.

However, let's say you go to nightclub #1 and it is 90% guys three times in a row.

And then you go to nightclub #2 and it is 90% fly girls four times in a row.

Which nightclub are you going back to?

Bad analogy. Your nightclub example is unlikely to be coincidence.

Let me improve on it then:

I am not a fan of Republicans or Democrats.

However, let's say you go to a nightclub with promoter #1 and it is 90% guys three times in a row.

And then you go to the same nightclub with promoter #2 and it is 90% fly girls four times in a row.

Are you going to that nightclub on a night with promoter #1 or promoter #2?

Feel better?

No, I still don't think you're capturing why I don't think this is a compelling argument. The reason why the nightclub analogy isn't very good is because with the nightclubs you have clear evidence of an association between which promoter is working and how many girls there are that's unlikely to be due to chance. You also have an obvious mechanism of how that could occur--the promoter gets people to go to the club.

Neither of those is true of the chart. If you take away Clinton and Obama, the association goes away. You haven't ruled out chance as an explanation when you can get rid of the correlation by removing 1 or 2 data points. Moreover, the connection between which party is in office and how the stock market does is a lot more tenuous than the connection between a nightclub promoter and who shows up at the club. There are a lot more variables that contribute to economic performance than whether the President has a D or an R next to his name, and there hasn't been an attempt made to control for any of them.

A final concern you might have is data mining: why is the S&P 500 being used as the variable measuring economic performance instead of any of the other possible metrics (GDP growth, unemployment, inflation, median income, etc.)? Is it because it's truly the best available indicator, or did the chart creator cherry-pick it because it lines up best with what he was trying to prove?

Until these questions are answered I don't think you can really conclude anything from this association.

Again, I'm sympathetic to your position and I don't think there's any reason to think that Republican administrations are better for the economy than Democratic ones. I just don't find this particular line of reasoning very convincing. To quote one of my favorite philosophers, Daniel Dennett, "There's nothing I like less than bad arguments for a view I hold dear."

[thegmanifesto]

(03-01-2012 01:10 AM)gringochileno Wrote:  

(03-01-2012 12:58 AM)thegmanifesto Wrote:  

(03-01-2012 12:51 AM)gringochileno Wrote:  

(02-29-2012 10:29 PM)thegmanifesto Wrote:  

(02-29-2012 10:13 PM)gringochileno Wrote:  

I'm no fan of the Republicans but I don't think this is a very strong argument. Correlation doesn't imply causation. At best, it shows that Democratic policies don't seem to have measurably negative effects on the stock market.

I am not a fan of Republicans or Democrats.

However, let's say you go to nightclub #1 and it is 90% guys three times in a row.

And then you go to nightclub #2 and it is 90% fly girls four times in a row.

Which nightclub are you going back to?

Bad analogy. Your nightclub example is unlikely to be coincidence.

Let me improve on it then:

I am not a fan of Republicans or Democrats.

However, let's say you go to a nightclub with promoter #1 and it is 90% guys three times in a row.

And then you go to the same nightclub with promoter #2 and it is 90% fly girls four times in a row.

Are you going to that nightclub on a night with promoter #1 or promoter #2?

Feel better?

Neither of those is true of the chart. If you take away Clinton and Obama, the association goes away. You haven't ruled out chance as an explanation when you can get rid of the correlation by removing 1 or 2 data points.

So, you remove the correlation by taking out 50% of the information?

Makes sense.

What if you remove 50% of the other side too?

Oh yeah, you come up with the same result.

Wait, are you saying this whole time that you like nightclubs with majority of guys?

Because then everything you are saying makes sense.

[gringochileno]

(03-01-2012 01:18 AM)thegmanifesto Wrote:  

(03-01-2012 01:10 AM)gringochileno Wrote:  

(03-01-2012 12:58 AM)thegmanifesto Wrote:  

(03-01-2012 12:51 AM)gringochileno Wrote:  

(02-29-2012 10:29 PM)thegmanifesto Wrote:  

I am not a fan of Republicans or Democrats.

However, let's say you go to nightclub #1 and it is 90% guys three times in a row.

And then you go to nightclub #2 and it is 90% fly girls four times in a row.

Which nightclub are you going back to?

Bad analogy. Your nightclub example is unlikely to be coincidence.

Let me improve on it then:

I am not a fan of Republicans or Democrats.

However, let's say you go to a nightclub with promoter #1 and it is 90% guys three times in a row.

And then you go to the same nightclub with promoter #2 and it is 90% fly girls four times in a row.

Are you going to that nightclub on a night with promoter #1 or promoter #2?

Feel better?

Neither of those is true of the chart. If you take away Clinton and Obama, the association goes away. You haven't ruled out chance as an explanation when you can get rid of the correlation by removing 1 or 2 data points.

So, you remove the correlation by taking out 50% of the information?

That's exactly the problem, there's not enough data there to draw a conclusion. If you really want to run with that nightclub example (leaving aside all the other problems with it that I pointed out), it's like if you went twice with promoter #2 and it was 90% dudes, and then the next two times it was 90% fly girls. Then with promoter #1 you went 3 times when it was 90% dudes and 1 time when it was maybe 70% fly girls. In that situation I wouldn't bet money that promoter #2 is going to bring the goods next time. Is promoter #2 better than promoter #1? Maybe, but you haven't proven it.

If there were an absolutely perfect correlation--say, the stock market had a Clinton-level boom with every Democratic president and flatlined with every Republican president--then this would be much more convincing. But it isn't.

[Deluge]

If 51 years of data is not enough for you, then no amount of data which runs contrary to your beliefs could ever satisfy you.

[gringochileno]

(03-01-2012 01:47 AM)P Dog Wrote:  

If 51 years of data is not enough for you, then no amount of data which runs contrary to your beliefs could ever satisfy you.

Haha look buddy, I'm probably more liberal than you are so don't go questioning my motives. I'd like nothing more than conclusive proof that conservative economic policies produce objectively bad results. In fact, I think there is good evidence of that--just not this chart. A bad argument is a bad argument whether I agree with its conclusion or not.

Thing is, even though it's 51 years of data, the Presidency hasn't changed hands very many times over that period so you really don't have many data points. Just eyeballing the data I don't think there's enough there to show a statistically significant deviation from chance (somebody could do a regression and calculate the p-values if you really wanted to test it) but even if there were, I think the bigger problems are all the confounding variables that haven't been accounted for and could be producing a spurious correlation, as well as the issue of potential data mining that I pointed to earlier.

This chart is a great example of how not to argue using statistics. There are a lot of common statistical fallacies illustrated by it.

[Tuthmosis]

(03-01-2012 12:58 AM)thegmanifesto Wrote:  

(03-01-2012 12:51 AM)gringochileno Wrote:  

(02-29-2012 10:29 PM)thegmanifesto Wrote:  

(02-29-2012 10:13 PM)gringochileno Wrote:  

I'm no fan of the Republicans but I don't think this is a very strong argument. Correlation doesn't imply causation. At best, it shows that Democratic policies don't seem to have measurably negative effects on the stock market.

I am not a fan of Republicans or Democrats.

However, let's say you go to nightclub #1 and it is 90% guys three times in a row.

And then you go to nightclub #2 and it is 90% fly girls four times in a row.

Which nightclub are you going back to?

Bad analogy. Your nightclub example is unlikely to be coincidence.

Let me improve on it then so you can follow:

I am not a fan of Republicans or Democrats.

However, let's say you go to a nightclub with promoter #1 and it is 90% guys three times in a row.

And then you go to the same nightclub with promoter #2 and it is 90% fly girls four times in a row.

Are you going to that nightclub on a night with promoter #1 or promoter #2?

Feel better?

Perfect analogy.

[Brian]

That means about as much as the Super Bowl indicator.

Definition of 'Super Bowl Indicator'
An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in the stock market for the coming year, and that a win for a team from the old NFL (NFC division) means the stock market will be up for the year.
Investopedia Says
Investopedia explains 'Super Bowl Indicator'
Though historically speaking the Super Bowl indicator boasts an 80% accuracy rate, remember the old maxim: correlation does not imply causation. In 2008, despite the New York Giants (NFC division) winning the Super Bowl (indicating a Bull Market), the stock market suffered one of the largest downturns since the Great Depression. Though the indicator is an interesting take on predicting the stock market, by no means should the correlation dictate an individual's portfolio construction.

[ElJefe]

What about this:

Some of the difference may stem from the fact that every Republican president since at least the end of World War II has faced a recession during his first term in office, Stovall said. Nine of 11 recessions that began since 1945 -- and seven of eight since Kennedy ran for president in 1960 --started with Republicans in the Oval Office.

Buddy, if it was as straightforward as this, every motherf***er on Wall St could pack his bags and go straight home because we'd all know we just needed to sit tight while waiting for the next Democractic President.

Not only this, but how much economic policy can a President enact anyways? If congress is against him? Clinton did well with a Republican congress. The economy in the US seems like it might be making a turn-around. With a Republican congress AGAIN.

Reagan had to contend with a Democrat congress, and things went pretty well under him for a while there, too. Is this making sense?

Are you factoring in US monetary policy as well? What about Greenspan, Volker and Bernanke? Does your dependent variable (stock market performance) not depend on that either?

Your night-club analogy is oversimplified and useless. The economy is a complex system politicians love to tinker with, and very few people have any idea of the parameters involved, transposed by matrices of untold numbers of vectors. It's a complicated reality that is so hard to model we educate and train thousands of professionals to do nothing but mess around with data and develop regressions just to get an inkling of how to go about compressing all those factors into a useful model.

If the economy was like a nightclub we could all go home right now... but it's not.

If ANYTHING the best situation is a President of one party working with a Congress of the other party, but even this is hard to justify.

[Samseau]

How did they come up with these numbers? What was the investing strategy used?

Whole thing smells like bullshit to me, with cherry picked numbers.

[ElJefe]

deleted

[PhilE]

(03-01-2012 12:40 AM)All or Nothing Wrote:  

(03-01-2012 12:15 AM)MikeCF Wrote:  

The chart makes sense.

Contrary to popular belief, investing in the stock market is not how the rich make their money.

The rich keep their money by having their taxes cut.

A robust stock market is good for middle class earners who have been contributing to their 401k's for years. (Pension funds, too.)

Republicans do whatever they can to cut taxes on the already-rich. Republicans do not want anyone else getting rich.

Republicans are the ultimate haters.

I don't think that is the whole story. My thoughts are that the Republican officials are heavily influenced by super wealthy white people.

The only problem with this is that super wealthy white people are a minute part of the population. So, the republicans appeal to average white guy in order to get votes and become elected. Then they turn around and feed the hand that finances their campaigns.

I don't know if that's exactly clear since I'm having trouble writing down my musings, but that's the basic premise of my ideas.

exactly

[Smitty]

The Fed has held interest rates at historically low levels. Investors have no choice but to put money into the stock market to realize some kind of return. Once the Fed is done playing, the market will fall. Has nothing to do with a Democrat or Republican in the White House -- it's bad monetary policy.

[Brian]

(03-03-2012 10:22 AM)Smitty Wrote:  

The Fed has held interest rates at historically low levels. Investors have no choice but to put money into the stock market to realize some kind of return. Once the Fed is done playing, the market will fall. Has nothing to do with a Democrat or Republican in the White House -- it's bad monetary policy.

Its refreshing to know that some people get it.

[JayMillz]

(02-29-2012 09:49 PM)thegmanifesto Wrote:  

While Republicans promote themselves as the friendliest party for Wall Street, stock investors do better when Democrats occupy the White House. From a dollars- and-cents standpoint, it’s not even close.

I've read many business articles that point this out.

[rozayINTL]

Pretty entertaining chart.
..Smitty is spot on though.

The bulk of retired people/baby boomers relying on their investment income are getting killed by the low interest rates, so they are piling money into stocks with high dividend yields and back into the market as a whole... for the moment. Media coverage of the financial markets is generally 2 steps behind, yet perfectly in step with the public's perception of how things are playing out. When the landscape shifts (which it will soon given the trend of volatility) many will panic and once again start buying gold.

Stock market rallies rely on positive earnings/rising multiples. The government has little to do with this, unless of course it is the catalyst for a major event (usually setting off a crash or more volatility - think last summer and the debt ceiling). If anything the government/Obama administration's impact on American businesses has been negative.

While earnings could be sustained through the next quarter... the expected slowdown in emerging markets (China most notably) will result in decreasing performance through the end of 2012 and 2013. Consumer confidence is always delicate, so multiples also have room to fall. If oil prices take off, you could see this happen sooner rather than later. Certainly that could change the nature of this chart.

**Note that when Obama came into office the market had plummeted so far that there was nowhere else to go but up.

[Entropy]

Ah! economics/finance....such an in exact art....unlike my favourite: science.

gringochileno makes sense to me. bottomline: correlation does not equal causation.

And the FED messing with the market....well, they serve their masters dont they?

Anybody knows any good collection of articles, rigorously well thought out, about pre-federal banks vs federal banks presence in the world economy? Read a couple that were unsatisfactory.

I am not saying just showing me charts like below(which has their merits)

[Samseau]

Here's something else the democrats can add to their achievement list, with new record highs!

http://www.zerohedge.com/news/ifoodstamps

[Smitty]

(03-01-2012 12:15 AM)MikeCF Wrote:  

The chart makes sense.

Contrary to popular belief, investing in the stock market is not how the rich make their money.

The rich keep their money by having their taxes cut.

A robust stock market is good for middle class earners who have been contributing to their 401k's for years. (Pension funds, too.)

Republicans do whatever they can to cut taxes on the already-rich. Republicans do not want anyone else getting rich.

Republicans are the ultimate haters.

Anyone who trades the markets knows that institutional buyers (largely fund managers) move the market. Those are the wealthy "fat cats" on wall street. The money they save every year in any tax cut is peanuts compared to what they make in the market in a given month.