Now that I've bored Cora to death with some newspaper, radio, and television (TV) background, I'm going to directly address her fears about presidential elections and portfolios. This week we'll look at some TV politics and how they relate to the stock market. Does it really matter if a politico blinks his or her eyes the wrong way? Can this small tremor be felt on Wall St.?

Perhaps the best way to answer these questions is to go back in time and relate seismic movements in the market with presidential happenings. We already know from the past few articles that President Franklin D. Roosevelt was a radio hound and that he was the first president televised at the New York World's Fair in 1939. His terms ran from 1933-1945, when he died suddenly from a cerebral hemorrhage. We'll start at this point, and the links provided below will give you and your teens more fodder for future research.

From the time of Roosevelt's death through Truman (2 terms) and Eisenhower (another 2 terms), TV was still in home market development. During this time, and especially by the end of the Korean War in 1953, Americans who invested in the stock market experienced a period of growth. The overall annual return for the 1950s stock markets was 19.28% compared to 8.72% in the 1940s. By 1961, when John F. Kennedy was elected as president, TV began its home market in earnest, and he took full advantage of this medium for his campaigns.*

Kennedy, according to the perceptions during that time, was a good-looking man with a ton of charisma. He televised well, and his wife, Jackie, was a charmer with a penchant for Chanel suits. Millions of people watched the debates between Kennedy and Richard M. Nixon and, although Kennedy performed with panache, he won only by a narrow margin. Cora and I wondered whether Nixon would have won if there were no televised contests between these two men. Kennedy was the youngest president ever elected, and we think that TV played a part in this man's success.

The aura that Kennedy produced during his administration was so palpable that it's not difficult to believe how quickly the national and international scene changed upon his assassination. That day, 22 November 1963, the markets closed at about 1:30 Eastern Time to avoid panic selling (see Brian Trumbor's article for newspaper blips after Kennedy died). The Dow Jones Industrial Average (DIJA) lost 2.89% of its value in a very short time, but by the end of 1963 - just one month after Kennedy's death - the markets regained their losses and, one year later, the DIJA was up 21.58%. This decade's average annual market returns were 7.78%.

When the return percentages drop, this does not mean the market as a whole did not continue to rise. If the market rose 19.28% in the 1950s and rose 7.78% in the 1960s, then the market rose - on an average - by 27.06% between 1950 and 1970. The markets also took matters into their own hands during the 1960s, as electronic trading increased (1964) with over-the-counter (OTC) equity availability, and when the National Association of Securities Dealers Automatic Quotation System (NASDAQ) was created in 1968. Although these new markets probably created a rise in volume, just as many people may have refused to invest because of political turmoil.

The same year NASDAQ came on board, the Democratic Convention was rocked by riots and the volatile atmosphere was compounded by Lyndon Johnson's refusal to run for reelection. Viewers nationwide were tuned to this political fiasco in Chicago, and the images are still burned in the minds of many who witnessed those scenes. Arising out of that unrest was a familiar face, Richard M. Nixon. Many voters remembered his debates with Kennedy, and they also remembered he lost by a narrow margin. That year Nixon won handily over Hubert H. Humphrey and third-party candidate George C. Wallace.

I'm not an apologist for any president, but when most people remember Richard M. Nixon, they remember Watergate and tend to forget his capable international strategies (which can be reviewed at his page on the White House list of presidents).** But, his skills at diplomacy were overshadowed by scandal, and the nation was shocked by his resignation on 8 August 1974. His final speech was televised live, and it was even shown in bars in Underground Atlanta (where I waited tables, working my way through college). You could hear a pin drop during that speech, because we witnessed the first president ever to resign the Oval office.

An important note before we go any further is that, when it comes to overall average market returns, it seems to matter little whether the president was Republican or Democrat. The Federal Reserve Bank of San Francisco states, "The Democrats have a slight edge in the pre-World War II period as a result of the effect of the 1929 crash and the subsequent recovery. However, since 1945, the returns have not been statistically different when Democrats or Republicans occupy the White House." I'm not a strong statistics person so I'm not sure about this information's accuracy, but this link provides information that might make a great report for some ambitious teen.

Cora and I are going to continue to compare politics and the stock market next week. We aren't going to cover the impact of war on the markets which, although closely related, is information that can be readily found if you type the keywords "war effects stock market" into a search engine. Our focus is still on TV, and next week we'll look at how a former president of the Screen Actors Guild walked into the U.S. presidency, and how his terms marked an upturn in America's financial outlook.

Until Then,
Linda Goin

* The percentages for this article were taken from Stock Pick System Stock Market History Page. Other interesting statistics can be found at Index Funds Advisor and "Essays on the Stock Market and What Young People Should Invest In" by Edward Renshaw, Professor of Economics, State University of New York at Albany.

** Please remember that perceptions from the White House are just perceptions, as my writing about the past is also a perception. However, I chose this site for this particular information as it is readily available, and Nixon's proficiency in international diplomacy is also noted in other valid sources.