Outlook Of The US Stock Market After The ElectionPrieur duPlessisupdated Nov 06, 2008TweetAt GET.com we maintain complete editorial integrity on our content & provide transparent & unbiased information. Companies don't pay us to include their products although we receive a compensation when you successfully apply to products from our partners. See how we make money here.At GET.com we maintain complete editorial integrity.The stock market yesterday (Wednesday) did not offer President-elect Barrack Obama as warm a welcome as he would have liked. According to Bespoke, the Dow Jones Industrial Index's [[^DJI]] decline of 5.1% was its worst post Presidential election day decline in history. As shown in the table below, yesterday was only the fourth time the Dow has ever lost more than 1% the day after a Presidential election (gray-shaded areas). "Coincidentally, all three previous periods occurred during the Great Depression as well as after an election that gave complete control to one political party," said Bespoke.The table also highlights how the Dow fared for the rest of the year. Unfortunately for the bulls, in each previous period the Dow had negative returns for an average loss of 2.1%.But is will be incorrect to necessarily ascribe the stock market's decline to the election of Mr Obama, especially not knowing the detail of his agenda. In my opinion is was rather as a result of investors focusing anew on the dismal economic situation the new President will be inheriting. The message of recession-like conditions was yesterday confirmed by the worse-than-expected ISM Non-manufacturing Survey (down from 50.2 to 44.4).Looking longer term, a BBC report refers to a 2006 study by Jeremy Siegel, a professor of finance at the Wharton School of the University of Pennsylvania, which shows that from 1948 to 2006 stock market returns averaged 15.3% a year under Democratic administrations, and just 9.5% a year under the Republicans. Also, a recent study published in the New York Times showed that $10,000 invested in the S&P 500 Index [[^GSPC]] in 1929 would have grown to $11,733 if invested under Republican presidents, but to $300,671 under Democratic presidents.The tag cloud - a way of visualizing word frequencies at a glance - of the text of Obama's acceptance speech makes for interesting reading. Strikingly, the most widely-used word was "promise" (32 times)!While urgent challenges will face Mr Obama at the onset of his presidency, it remains difficult, in an environment of economic and profit recession, to read the stock market's direction and make a call on whether a secular low has been reached. At least, frantic actions by central banks, governments and the IMF to fend off a total economic collapse, as well as gradually improving credit market conditions as seen from the TED spread declining by 211 basis points since the middle of October, are positive signs that we could be in a broad bottom area of this bear market. Shorter term, it is crucial for the recent lows (8,176 on the Dow Jones Industrial Index and 849 on the S&P 500 Index) to hold.The last word goes to John Hussman (Hussman Funds) "It is impossible to be a successful equity investor without the willingness to accept some amount of market risk when conditions appear frightening. If anything should be clear from the bubbles of recent years, the greatest risks are not when prices are depressed, the economy is weak, and investors are frightened, but rather when prices are elevated and an unendingly positive outlook for technology, or housing, or global growth, or private equity, or emerging markets, or commodities seems all but certain."Editorial Disclosure: Any personal views and opinions expressed by the author in this article are the author's own and do not necessarily reflect the viewpoint of GET.com. The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the companies mentioned, and have not been reviewed, approved or otherwise endorsed by any of these entities.