The Election Cycle & Stocks: Does it Deserve Attention?
Markets are mixed in October
Hurricane Sandy through America a curve ball in the waning days of October, as the financial markets were re-opened on Halloween for a full session after two days of closure. Prices and yields were little changed. Historically, Octobers are difficult to pin down as to direction; but important inflection points do occur more often than not. Two months to go in this horse race.
The national election just adds to the uncertainty going forward. Here are some interesting election market stats* that I’m sharing this blog post. Of course, to base your voting on this one stat would be silly; vote based on your values and beliefs.
The one reliable indicator dating back to 1900 is that when the incumbent party wins the White House, the stock market rises quite nicely the next year.
3 months after 12 months after
All Presidential elections since 1900 +1.7% +6.4%
Incumbent party wins (17 times) +4.1% +9.8%
Incumbent party loses (11 times) -2.0% +1.0%
Why is this? Mark Hulbert of MarketWatch theorizes that the numbers are influenced by the state of the economy; and whether it is IN, or about to SLIP into a recession as of Election Day. My take: Election Day is JUST a DAY. The economy ebbs and flows from expansion to contraction, boom to bust. To infer that a particular candidate would influence this cycle between specific dates is far-fetched. Every administration “inherits” the baggage of the prior team in Washington. That will not change. Surely credit will be claimed if it helps your cause. I have not heard it being used lately however by any candidate.
Be safe out there; remember to take your ID’s, polling address, reading glasses and other important stuff with you to vote. Good luck.
~Barry Unterbrink, CRPC
Fort Lauderdale, Florida
* Excerpts and data from Mark Hulbert; MarketWatch, Inc.