What Are Your Thoughts On This.

Not many people realize that the stock market is oneof the bestpredictors of theoutcome of a Presidential election. So the best way for investors to determine whether a President will win another four years in the White House is towatch what the market does.
The stock market over the years has beenone of the most consistent forecasters of the results of the presidential polls.Since 1948, the Standard & Poors 500-stock index has proved to bea reliable prognosticator of whether or not an incumbent President gets to bereelected, says Sam Stovall, Chief Equity Strategist at Standard & Poors Capital IQ.
The S&P 500 did an excellent job as an election-prognosticator technique in the past 62 years, with an accuracy rate of 88%,notes Stovall, who is also chairman of the S&P investment policy commmittee.
Heres what the record shows: The S&P 500-stock indexprice performance in the three months leading to apresidential election has been a good predictor of whether a sittingPresidentwould be reelected or replaced. Specifically, when the S&P 500 index rises fromJuly 31 through October 31, the incumbent President ends up beingreelected. But when the S&P posts a loss during thatthree-month period, the incumbent gets booted out ofthe White House.
Sopay close attention to the markets performance in the three months from July to October leading up to the Novvember presidential election, advises Stovall. It will probably do a better job than the plethora of political pundits prognosticating on the presidency, he argues.
The S&P 500has also been a good guide for investors in severalotherimportantways. One of them involvesthe so-called January Effect, which proclaims that how the stock market does in the month of Januaryindicates howstocks will do during the year.The January barometer has been proved rightin forecasting positive calendar-yearperformances almost 100%,says Stovall.

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