The Dow's decline of 5.1% today was its worst post Presidential election day decline in history. As shown below, today was only the fourth time the Dow ever lost more than 1% the day after a Presidential election day (gray shaded areas). Coincidentally, all three prior periods occurred during the Great Depression as well as after an election that gave complete control to one political party. In the table, we also highlight how the Dow did going forward for the rest of the year. Unfortunately for the bulls, in each prior period the Dow had negative returns for an average loss of 2.1%.
Interestingly, all we heard today was that the market was reacting to a weak ADP jobs report and not the election results. Yesterday's election was widely touted as the most important election of our lifetimes. How could the results of the most important election of our lifetimes not impact the market? We're excited for our new President elect Obama, but the market no doubt has questions about the lack of checks and balances that will accompany him in Washington.
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