US Elections vs. the Stock Market

With the upcoming United States presidential election, lots of investors are worried about how the election outcome will affect their investments. This is not a new worry - elections are stressful times and it seems obvious that the outcome should impact the stock market. Rhetoric from across the political spectrum certainly doesn’t help. Fortunately, the relationship between stock markets, elections, and political parties has been studied extensively, allowing us to step back from the rhetoric to consider the historical data and the theories that explain it. Referenced in this video: Political Climate, Optimism, and Investment Decisions: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1509168 With Greater Uncertainty Comes Greater Volatility: https://jii.pm-research.com/content/10/3/6 The Presidential Puzzle: Political Cycles and the Stock Market: https://onlinelibrary.wiley.com/doi/epdf/10.1111/1540-6261.00590 What Moves Stock Prices?: https://www.nber.org/papers/w2538 Political Cycles and Stock Returns: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2909281 Time varying risk aversion: http://www.eief.it/eief/images/Guiso-Sapienza-Zingales_JofFE_2018.pdf Partisan Financial Cycles: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1616374 Unemployment and the Democratic Electoral Advantage: https://www.cambridge.org/core/journals/american-political-science-review/article/unemployment-and-the-democratic-electoral-advantage/350FF2535247A605502B6941EAA84E16 Timestamps: 0:00 Introduction to the relationship between US Elections and stock market returns 0:45 Immediate short-term effects of election results on stock market returns 3:20 How does the political party in power affect stock market returns? 7:57 Risk aversion and election outcomes ------------------ Follow Ben Felix on - Twitter: https://twitter.com/benjaminwfelix - LinkedIn: https://www.linkedin.com/in/benjaminwfelix/ Visit Rational Reminder: https://www.https://rationalreminder.ca/ Follow the Rational Reminder on: - Twitter: https://www.twitter.com/RationalRemind Visit PWL Capital: https://www.pwlcapital.com/teams/passmore-felix/ PWL Capital Blog Post: https://www.pwlcapital.com/u-s-presidential-elections-vs-the-stock-market-whos-really-in-charge/ Follow PWL Capital on: - Twitter: https://twitter.com/PWLCapital - Facebook: https://www.facebook.com/PWLCapital - LinkedIn: https://www.linkedin.com/company/pwl-capital/ You can find the Rational Reminder podcast on Google Podcasts: https://www.google.com/podcasts?feed=aHR0cHM6Ly9yYXRpb25hbHJlbWluZGVyLmxpYnN5bi5jb20vcnNz Apple Podcasts: https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582?mt=2 Spotify Podcasts: https://open.spotify.com/show/6RHWTH9iW7hdnA7eAg7ukO?si=hjZNfLKuSjSeWX38GPqhVA ------------------