VIEWS: 8 PAGES: 2 POSTED ON: 5/17/2010
The presidential election and stock market performance How will the recent election results affect your portfolio? The only sure answer is: there is no sure answer. The cycle theory One adage of stock-watchers holds that an NFC team winning the Super Bowl often points to a bullish year ahead. No reasonable explanation exists for why this is the case, other than odd coincidence. Another, the Presidential Election Cycle Theory, says that you can count on a weak market in the first two years of an administration and a stronger market in elected president’s proposals: unforeseen circumstances the last two. This is a bit more logical than the Super may scale back major initiatives or refocus priorities; Bowl theory. After all, it’s in a president’s political prior commitments made by an outgoing administration interest to make tough economic decisions early in can hamstring an incoming one; and Congress, an administration. If economic pain must be felt, which controls government spending, may have a it might be alleviated by the next election, helping different agenda. ensure that voters have full wallets and overflowing Of course, the biggest monkey wrench thrown into the 401(k) plans when they go to the polls. And in fact, incoming administration’s plans is the global financial throughout much of the 20th century, the stock market crisis that has panicked world markets for months. generally performed better in the years leading up to a Former Federal Reserve Chairman Alan Greenspan presidential election. described current economic pressures — specifically This theory, in addition to being a very cynical view of the turmoil in the credit markets — as “a once-in-a- American leadership, has too many holes to be used as century” event.1 a hard-and-fast rule for successful investing. Presidential elections occur only every four years, so there’s not an Can a new president affect the market? extensive amount of data to make comparisons. Also, The immediate effect a new president can have on the the numbers don’t work for every administration, and stock market is limited. Long-term, sustained growth the actions of other institutions, such as the Federal of your portfolio may result only from a fundamental Reserve, likely play a greater role in moving the market. strengthening of the economy. Perhaps the strongest argument against using the cycle Perhaps the greatest weapon the new president has to theory for investment advice is the market’s performance stabilize the markets, at least in the short term, is his in 2008 — a year that theoretically should have produced access to a national audience eager for reassurance. strong returns. Putting it very mildly, this was not the case. “The first and foremost thing he has is the ability to promote confidence, and that’s an absolutely New policies. New opportunities? essential ingredient … of stabilizing the economy and It seems to make sense that a victory by a presidential making people more hopeful about the country,” says candidate who promotes alternative energy, for presidential historian Robert Dallek. “That’s very much example, should benefit companies working in that the president’s job.”2 industry. However, many factors can affect a newly 1 http://money.cnn.com/2008/09/14/news/economy/greenspan 2 http://www.msnbc.msn.com/id/27407243/ Plan sponsors and participants should carefully consider the investment objectives, risks, charges and expenses of the investment options offered under the retirement plan before investing. The prospectuses for the individual mutual funds and The Standard’s Group Variable Annuity Contract and each underlying investment option in both the group variable annuity and group annuity contain this and other important information. Prospectuses may Standard Retirement Services, Inc. be obtained by calling 877.805.1127. Please read the prospectus carefully before investing. 1100 SW Sixth Avenue Portland OR 97204 877.805.1127 StanCorp Equities, Inc., member FINRA/SIPC, distributes group variable annuity and group annuity contracts issued by Standard Insurance Company and may provide other brokerage services. Third-party www.standard.com administrative services are provided by Standard Retirement Services, Inc. Investment advisory services are retirement.standard.com provided by StanCorp Investment Advisers, Inc, a registered investment advisor. StanCorp Equities, Inc., Standard Insurance Company, Standard Retirement Services, Inc., and StanCorp Investment Advisers, Inc. rp-14371 (11/08) are subsidiaries of StanCorp Financial Group, Inc. and all are Oregon corporations.
"The presidential election and st"