Since 1984, the S&P 500 index, which tracks five hundred of the largest companies on U.S. stock exchanges, has correctly predicted the winner of the presidential election with one hundred percent accuracy. Going back to 1928, the hit accuracy is still 87 percent. In all its simplicity, if the market index is rising, the ruling party wins and vice versa.
– This is as close to unambiguous as to be and can be, analyst at financial house BTIG Julian Emanuel commented to the Wall Street Journal.
Over the course of U.S. history, the market has fallen six times over the three-month review period from August to election day. In 1932, 1960 and 2008, Republicans were in power, in 1952, 2000 and 2016, Democrats. Every time the ruling party lost the election.
Right now, the situation is exciting if you rely on S & P’s predictive power. The index peaked on September 2, but has since fallen just over 200 points to readings in early August and to about the same level as in February, just before the stock market-induced stock market crash. According to data collected by the WSJ, September is the weakest month of the year in the stock market: S&P has reached an average of 0.96 percent frost and has fallen more often than it has risen.
– Think about this, no one believed Hillary Clintonin disappear in 2016, except for the stock market. The Dow (Jones Industrial Average) was in a nine-day downward spiral just before the election, LPL Financial’s leading market strategy Ryan Detrick pointed out recently on his blog.
But the year has been exceptional in many other ways and Detrick notes that staring at the index can be misleading.
– History has shown that if there has been a recession in the two years before the election, the incumbent president has tended to lose. If there has been no recession during that period, he has met to win, the LPL analysis says.
This has always been the case Calvin Coolidgen since time immemorial. Vice President Coolidge became president during the recession Warren Hardingin died in 1923 and won the election the following year. The recession was short and mild at the time, and the hot season of economic growth of the 1920s was already in full swing.
– The unique circumstances of this year’s pandemic may increase the credibility of the theory that, for the first time in a hundred years, this metric may be wrong. Especially if the stock market and economy continue to grow until election day, Detrick ponders.
In other words, the recession plaguing the United States and the world this year may have time to dispel voters if the upward trajectory is reached firmly enough.
President Donald Trump has always played the good readings of the stock exchange throughout his term and seemed to take credit for himself. He is also seen by the people as a good economist, and in a number of surveys he has lagged behind his candidate in most areas of policy-making. Joe Biden after, but not in the economy.
What about the three times S&P has been wrong?
In 1956, the index had fallen by 3.2 percent when Dwight D. Eisenhower was elected for a second term. Eisenhower’s popularity at the time was over 70 percent, according to measurement company Gallup.
In 1968, former Vice President of Eisenhower Richard Nixon defeated the Democratic candidate at a time when S&P had risen 6.0 percent. His opponent was a relatively unpopular president Lyndon Johnson vice president Hubert Humphrey.
In 1980, S&P, on the other hand, was up 6.9 percent on election day, when Ronald Reagan crushed the extremely unpopular sitting president Jimmy Carter urnilla.
S&P is an index of the credit rating agency Standard & Poor’s, established in 1926. At that time, there were 90 companies to be monitored.