Does the Stock Market Predict the Election?
Did you know that the 3 months preceding a presidential election, the stock market has predicted the results with 86% accuracy?
People seem to vote with their wallets and if history is any indication this election is currently on pace to give Hillary
the win. However if you look at 1980 as one of the anomaly years its interesting to note that this is the year Reagan
won in a landslide as depicted in the chart.
What’s interesting is that not only did Reagan win in a landslide but he received the highest number of electoral
votes ever for a non-incumbent candidate! Other parallels include the fact that Reagan was at one time
aligned with the democrats and was an actor.
Trump’s GOP rivals hit him hard for being too liberal although you won’t hear that charge today coming from the
left or the right.
The other interesting parallel is that Reagan was a Hollywood actor and many claim Trump is unfit because of
his reality TV status. With just two months until American’s cast their ballots we will have to see if history sides with
the stock market being a predictable indicator.
Strangely enough the markets have been some of the calmest they have ever been in my lifetime the past month with very little volatility. According to a CNN Money article, CNN quotes LPL Financial who said the following “. The
benchmark index went 17 straight days of moving less than 0.75% between the day's peak and the day's low, LPL
Financial reports. That hadn't happened on records going back to 1970.”
The timing of these sanguine markets is also odd given the fact this is in my opinion the most divisive election in
history, where no one wants to readily admit being a fan of either candidate, yet the markets are quite. August is
typically one of the most volatile months and August 2015 was no exception with the market dropping 1000 points on
Donald Trump is on the offensive, by charging that the FED is artificially keeping interest rates low to help Hillary. I
tend to agree with this assertion which is why I’ve been stating that the FED would not be raising rates before the
election. For an analysis of where rates are going check out this article I wrote in June .
Only time will tell if the market will predict this outcome.
Do you think Donald Trump is right, and that the FED is trying to help out Hillary?
Written by Tim Picciott CFP® CRPC®