Are Election Years Good For The Stock Market

During an election year.

Are election years good for the stock market. Presidential election years are traditionally good years for the stock market according to the stock trader s almanac. But you can t always count on future returns to match past ones. On the one hand it s true that the stock market is cyclical which makes it possible for investors to look to history to observe trends and make predictions.

Studies on election years and market returns. One question that always seems to come up in investing circles every four years is the relationship between an election year and the stock market. Stock market performance during an election year it should be of no surprise that the markets performed better during a year when an incumbent president is elected compared to a new administration.

Sure the outcome of the election could cause the stock market to dip in the short term especially if the results are disputed. People in the market will do anything to gain an upper hand in investing. History suggests that the correlations between an election year and the stock market follow strong predictable patterns.

A possible explanation is that a majority of recent economic expansions have ended under gop administrations. Election year historical data is a good base for identifying the range of outcomes for this year as 2020 is an election year. But historically the stock market has rewarded those who stay.

They will scour past data and events to find a correlation between it and any trends in the market. Regardless of who is running election years can have a big impact on the market s performance and given that this year s election is taking place in the midst of a global pandemic this is all the more true. November is historically the best month of the year for the s p 500 during election years and the rest of the year typically ends strong according to lpl s ryan detrick.

Since 1952 the dow jones industrial average has climbed 10 1 on average during election years when a sitting president has run for reelection according to the stock trader s almanac which is. The data below shows the historical data which may be relevant to how.