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Of course, who becomes the Democratic presidential nominee is a very important issue this year and people worry about that every which way from black beans to bananas. But the fact of the matter is that this year for the Democrats it's a little bit different that's been in the past because in the initial convention vote, they disallow super delegate votes until there might be no nominee after a first vote and then you would get super delegate votes later in the convention.
And the Democrats don't have what are known as winner-take-all states, so if you get above minimum threshold of 15%, you get a proportionate amount of the delegates of that state. This cycle is a little bit complicated by the fact that there's a lot of entrants and no one democrat that's completely dominant.
Coming out of the blue in mid-November, Michael Bloomberg throws a new twist on all of this because he spends a lot of money and that money within the Democratic realm of ideology comes off the more conservative side of the ideological spectrum for Democrats and in that takes away some of the potential luster from some of the other more conservative Democrats and in that since there's a fair amount of the prior polling that's gone to Vice President Biden and also to Pete Buttigieg.
That runs the likelihood or the risk depending on how you want to view it, of further increasing the notion of no first ballot presumptive nominee. So the fear this time is that there's no presumptive nominee by the time you get to the end of the primary cycle and that then you get to the so-called brokered convention and if that's the case what that does to markets is it increases the uncertainty of who the nominee will be until later in the time period.
What normally happens in presidential election relative to market is the beginning of the year has increased political uncertainty which unsettles markets to some extent as there's a lot of squabbling over who nominees will be. This time that's only on the Democratic side because it's not a open race on both sides.
And then within the Democratic side you've got this wide array of candidates and then the possibility that this gets decided later than normal since we haven't had a non first ballot nominee for either party since 1952 and therefore we've always had a presumptive nominee. Once you get to presumptive nominees uncertainty starts to fall as the market can pre price the outcome of those two against each other.
But until then it can't and so you don't really fully get that falling and winnowing uncertainty. In this case until the middle of July when the Democratic convention occurs and then you'll run into more what I would view as market normalcy which is two candidates to market pre pricing the outcome of those two against each other leading to an outcome that gives us what we always get which is a certain winner and that winner is usually a little worse for the markets if it's a Democratic winner in November in the election year but then stronger in the inaugural year better for markets if the winner is Republican in the election year and then worse in the inaugural year and you can see that in the data of year by year returns of the election of Democrats and Republicans.
And the reasoning behind that I believe, not certain—always hard to disentangle these things—but the reasoning is, people tend to think the Republicans more pro-business, Pro free market and they get excited about that and then when when the Republicans elected and then when the Republicans in office they find out to their disappointment that in a governmental system with congressional judicial and presidential to three branches that that president can't do as much as they hoped the exact reverse happens with the Democrat.
The Democrat is often thought of as more anti-business, anti-market, anit-rich, etc., etc., bad in the election year then they get to the inaugural year and find out that he and maybe this time, she couldn't do as much as some people had hoped others had feared and so the negatives in the election year the positive surprise is in the inaugural year those two flip-flop between Democrat and Republican that's the likely outcome from here whether we get the feature of this Democratic nominee, that one or some other one.
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