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Commentary > HaysWire
Election rally coming?
One analyst's numbers suggest we're in store for a stock rise regardless of who wins.
November 2, 2004: 12:37 PM EST

NEW YORK (CNN/Money) - As we wait for the outcome of this election, on the edge of our electoral seats, even biting our voter fingernails, it makes no sense to talk about what a second Bush or first Kerry presidency would mean.

Instead, let me share with you some stats compiled by David Kotok of Cumberland Advisors. He says that stocks tend to rally after the election regardless of who wins.

Since World War II, in the first 3 months following the election the U.S. stock market as measured by the S&P 500 averaged a 6 percent rise if a Democrat beat a Republican incumbent and if the Republican held his incumbency stocks gained 2 percent.

As for the longer term, after 12 months stocks averaged a 2 percent increase whether the elephant or donkey won. For the entire 4 year presidential term, post World War II Democrats have annualized about 11 percent up and Republicans 6 percent.

And David is pretty optimistic because he thinks that the market has been so focused on the negative of election uncertainty it has overlooked the postives of low interest rates, oil prices that may have peaked, and a weaker dollar that can help U.S. manufactuing firms.

"We think that this year's post election rally will be stronger than average. We would not be surprised to see the Dow cross 11,000 by early 2005," Kotok predicts. "That's right, from the pre-election low we go up around 10 percent or so by Spring, 2005."

Thanks, David. Let's hope history repeats itself  Top of page

Kathleen Hays anchors CNN Money Morning and The FlipSide, airing Monday to Friday on CNNfn. As part of CNN's Business News team, she also contributes to Lou Dobbs Tonight.

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