Impact of Presidential Election on Financial Markets.________________________________________________________________________________________________________________________________________
Hello Traders Investors And Community.
Welcome to this educational idea about the Impact of Presidential Election on Financial Markets. First of all, this is not a political view at all nevertheless we
are facing the next important event that can have a substantial effect on the financial markets and therefore also important for traders and investors. Coming
to this conclusion the history has shown that the presidential election and its pre also as post events can be suited into a whole presidential-election-cycle in
which the several stages and timeframes within the cycle affecting the performance of markets.
For this case, I looked at the past data and how presidential elections affected market performances and found out some very interesting and worthwhile
things about it, these data resulting from the past election data can be measured into a 1.5-Year-Presidential-Pre-And-Post-Election-Performance-Cycle and
the whole 4-Years-Presidential-Election-Performance-Cycle , both cycles are measured by historical market data and have a logical and coherent approach
within them as the reelected or elected party together with the president playing an elementary role within it.
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1.5-Year-Presidential-Pre-And-Post-Election-Performance-Cycle:
As you can watch in the graph on my chart, the past data has shown that it is a meaningful factor wether the elected party gets reelected or other party gets
elected. This is matching with the theory that the new elected party needs to adjust firstly to increase economy properly, however what they both have in
common is the decline in the first year after election where the market has shown decrease whether under the incumbent party or new elected party.
Furthermore, the graph shows that certainly after the first year since election has passed the market tends to increase where with incumbent parties the
market performed better and on the contrary, with a new elected party the perfomance of the market increased also however not that big as with the
incumbent party where the increase was partially four times higher.
Besides that what is also really interesting here is the difference between the incumbent party and new elected in the last six month to the new election,
where the market showed some steady decrease in growth however still an increase with the incumbent party while under the new elected not that
much and also showed declines to the downside.
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4-Years-Presidential-Election-Performance-Cycle:
This graph shown in the left bottom of my chart is explicating the importance of the 4-years passing after a election, where the market clearly showed a
weaker performance and possible declines in the first year after election which is matching also with the first graph and 1.5-years. This can result of a first
adjustment in the market to this fundamental macroeconomic event before it can regain in pace together with the elected party and economic policies.
The performance increased averagely steadily in the second year after election in historical price data till it reached its peak in the third year before election
as the sitting party and president going into the objectives they have set in the campaign to increase the economy and with the goal to get reelected, this
data was fairly consistent, regardless of the presidents and party political leanings.
In the first year the peak performance going a little bit back which is also matching with the first graph where it also counts on the incumbent party or the
new one, this year is the preparation on the new election and data has shown that performance has experienced steply declines till the election countdown.
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Conclusion:
Taking all these factors into consideration we can say that the market in the first year after election begins to grow slowly and firstly adjustes to the election
results as the party comes in touch with it, then the performance begins to grow after the second year, here is it also a fundamental factor if the incumbent
party got reelected or a new party got elected, as the incumbent reelection showed averagely better results. This tendency to the upside reaches its peak at
the third year and then falls slowly till the election countdown. These data has been really coherent and repeatedly in the past that is why the election cycle
is an important measurement that should not be kept by side. At the end it has to be noted that a massive swift in politics can also transform the cycle into
other performances, however, this did not happen till now.
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Outlook:
It is no more than two months till the next election is taking place and it will be an significant occurrence as historical data has shown if the incumbent
party currently consisting wins the election anew or new party is going to taking place which can change performances. Not only by the fact that history
has shown declines in the first year after election we should not ignore that the corona crisis is still not yet over and that there exists a gap between real
economy and stocks where real economy is still damaged by the corona increase and measurements while stock market making gains, this is an unhealthy
environment which can unload itself, the real economy and stock market need to grow together for providing a solid market growth, this current economic
disadvantaged situation matching with the first performance year after an election which is averagely not the best can take place into an inconsistent market
outlook, therefore we should not keep the decline perspective out of sight especially the weeks and months it can show up in critical movements.
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In this manner, thank you for watching , support for more tutorials and a good day!
"There are many roads to prosperity but one must be taken."
Information provided is only educational and should not be used to take action in the markets.
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