how do stocks do in an election year?
TRANSCRIPT
How Do Stocks Do in an Election Year?By www.TraderNewsandReviews.com
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The major party conventions are past and there are fewer than 100 days to the election.
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How should you be buying or selling stocks?
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In fact, how do stocks do in an election year?
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Would Clinton or Trump be better for the market?
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For that matter can the stock market help predict the winner of a presidential election?
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According to CNN Money stocks can predict the winner.
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Forget the polls. Wall Street has another way to predict whether Donald Trump or Hillary Clinton will be the next president of the United States.
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Keep an eye on the stock market from August 1 through October 31.
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If stocks go up during that three month stretch, expect Clinton to win. If stocks slide, Trump will likely prevail.
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Those critical three months have been astonishingly accurate at predicting the next president.
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As far back as 1944 the party in the White House wins the election 82% of the time if stocks go up in price between July 31 and October 31.
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And if stocks fall during that time, 86% of the time the other party has taken the White House.
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The only times when this rule of thumb did not apply was when there was a strong third party candidate were in 1968 or 1980 or when there was a last minute geopolitical surprise in 1956 and France and England seized the Suez Canal from Egypt.
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That having been said how will stocks if Clinton wins or if Trump wins?
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According to CNBC the stock market reaction to a Clinton presidency would be a mixed bag.
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Wall Street - and the stock market - may now be comfortable with the idea of a Hillary Clinton victory, but her policies and those of other Democrats may not be particularly good for the lagging oil sector, minimum wage employers, financial companies, big tech and biotech companies, among others.
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Other sectors could be winners, however, including hospitals, internet companies, solar, clean energy, discount stores, railroads, and media and entertainment content companies.
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There is also a whole group of companies in infrastructure, defense and cybersecurity that would stand to win from both her policies and those stated by GOP candidate Donald Trump and the Republican Party in its platform.
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This sort of projection depends on whether Clinton would be opposed by Republican majorities in the Senate and House or working with a congress controlled by her own party.
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One of the problems in predicting what the market would do in response to a Trump victory is that he has no record in government to examine.
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But one can look at his remarks on the campaign trail.
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Simply based on his party Forbes writes that he may be bad for markets.
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A lot of people seem to think that if Donald Trump becomes the next U.S. President, then it will be good for our stock markets.
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After all, he is a successful business man.
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And we also tend to think that Republicans are the party of business.
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However, Trump may actually be bad for markets.
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They quote a study from the Journal of Finance stating that when a Democrat is in the office the market’s return over the three month treasury is 11% and when a Republican holds the office it is 2%.
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The data goes back into the 19th century.
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