The Effects of Becoming President Case Assignment

The Effects of Becoming President and Dow Jones industrial average DJIA since 1990
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The presidential cycle influences the performance of the stock based on business sentiments, uncertainty and perceptions about the incoming president. In the first term of President Bill Clinton beginning 1992, the stock index was on an upward trend. On November 1, 1991, the DJIA was 2,894.68 points it was then 3,305.20 points a year later and 3,683.95 points on November 1, 1993 (Yahoo Finance). Even though, the Democratic administrations have recently been associated with more regulation, this was the year that Dow Jones rose consistently in a presidential year. The worst performing year was in 2008 another Democratic administration under president Obama. The Dow Jones opened at 13,371.72 on 1st November 2007, but fell to 8,829.04 points in November 3, 2008, but ten rose to 10,344.84 points on November 2, 2009 (Yahoo Finance). However, the performance in 2008/2009 was consistent with the global recession and contraction of the U.S economy.
The year before President Bush’s reelection the Dow Jones was 9,782.46 points on the first day of November 2003, and jumped substantially the next month to 10,453.92 points on Dec 1, 2003. On Nov1, 2004 it was 10,428.02 points and 10,805.87 points the next year. The stock exchange performance fluctuated during Bush’s second term, but was mostly rising. Bush cuts and Republican pro-business sentiments may have influenced business sentiments. This is especially after his reelection as there was certainty that he would continue with similar policies. There is a need to take into account changes in the Senate enacts legislations that affect fiscal policies especially taxes.
Regardless of the political party with the majority, uncertainty during the first year after elections has slow growth, especially when there is a new president compared to the time an incumbent has been reelected. According to Shell and USA Today (2013) the S & P 500 returns in an election year have been 3.4% compared to 11.3% in the pre-election year and 9.5% during the election ...