Monday, November 01, 2010

Mid-term elections and US stock returns

We tossed out a few links on US mid-term elections and their impact on stock prices in last month's view of global stock returns. Thought I'd include them here ahead of tomorrow's elections and offer you a quick overview.

Do midterm elections impact stock prices? - Fidelity touts the outperformance of large-cap and small-cap shares in the year following US mid-term elections.

Nice table included, which breaks down the election results and historical stock performance in times of party gridlock and party harmony.

2. Impact of mid-term elections on S&P 500 since 1990 - Nice Benzinga article that takes issue with the "tradable bottom" supposedly offered up in mid-term election years. Here is John Bougearel's take on the matter:

Much of the statistical analysis surrounding the presidential cycle is misleading. Yes, there is some merit to the presidential cycle, but it is really tied to events exogenous to the elections themselves."

Actually, the author notes early on that the tendency for the stock market to be higher at the close of the following year is impressive, but that mid-term election year lows "can only be discerned with the benefit of hindsight".

3. Midterm elections: past and present - Advisor Perspectives takes a thorough look at midterm election results from 1932-2006 and comes up with some useful insights on the political and financial outcomes of midterm election years.

You'll also find a voter party affiliation breakdown for the current midterm election, and a good overview of the "implication for investors". Scroll down to see their table of "Median S&P 500 Total Returns", which breaks down the stock performance results for midterm election years and succeeding years according to party control of the House and Presidency.

4. Jim Gobetz, aka Aiki14 on Twitter, is back in the broadcasting chair for this StockTwits TV update on the election cycle. If you know Jim from the StockTwits stream and his earlier "Pre-Market Take" shows, then you probably know that he is a guy who enjoys talking about current events and their potential influence on the markets and the economy. Check it out.

That's enough from me. Enjoy the data, and if you're so inclined, get out there and vote the bums out!

*Photo credit: Park West Gallery Blog.