Oct 182 min read

Can Stocks Predict The Presidency?

ANSWER: Maybe

This interesting study looked at the performance of the Dow Jones Industrial Average Stock Index (DOW) to find a pattern that predicted the president.

They found that if the DOW was positive in the 11 weeks before the election, the incumbent party won in the last 22 of 24 presidential elections.

The DOW is currently quite positive in the 11 weeks leading up to this election (5.5%).

It is worth noting that this method didn’t work for the 1968 election of Richard Nixon. The authors point out the odd similarities between that election and the one we are currently in:

A deeply divided electorate
A president of the incumbent party who dropped out late in the race (Lyndon B. Johnson & Joseph Biden)
A vice president stepping into the vacant role'

Additionally, there is also a large discrepancy between stock market performance and overall consumer sentiment.

I wouldn't bet my marbles on this type of historical cherry-picking, but it is quite interesting. To read more and to see the sourcing for the chart above, click here.

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