Stock Market Trend During Election Year

The first 2 years of a presidential term have been associated with below average returns while the last 2 years have been well above average.

Stock market trend during election year. 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. The election of 1928 occurred before the infamous stock market crash of 1929. President trump is now seeking a second term and the s p has gained an average of 6 6.

Smith 1932 8 2 roosevelt vs. Landon 1940 9 8 roosevelt vs. Since 1929 the united states has had 14 recessions.

In election years the market generally rallies all the way into early september. This ushered in the great depression. On the other hand imagine further that investor 2 bought the s p 500 on the first trading day of the inaugural year of each presidential election during the test period and liquidated the portfolio on september 30 of the second year of the.

History suggests that us stock market returns are correlated with the presidential election cycle. It is a normal trend for the stock market to rise during an election year. Hoover 1936 33 9 roosevelt vs.

Of these 14 recessions only five have occurred during a general election year. This strategy kept investor 1 out of the market from january 1 of the inaugural year through september 30 of the second year during the test period. The year before an election year is historically the strongest at 13 3 returns then things slow down considerably to 5 4 returns in election years.

In the 23 four year presidential election cycles beginning in 1928 through this year the market failed to produce a gain only five times in the third year of the cycle 1931 1939 1947 2011 and 2015 which on average outperformed the other three years by a wide margin. But there are some clear exceptions. 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.