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Wall Street and the White House

September 19, 2012

Reality: Over the last four election cycles, the rallies occurred when Democrats won.
-Richard Golod, director global investment strategies, Invesco

 

How wise is the conventional wisdom of market politics?

It's an axiom of market politics: Historically, investors win during presidential election years.

Conventional wisdom holds that the market runs a bearish-to-bullish, four-year presidential election cycle from the first year of a president's term. The stock market typically struggles after inauguration, gains momentum during pre-election years and produces positive returns in presidential election years. But the reality is that three of the last four election cycles have run counter to that pattern, as the chart below shows.

 

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