United States Election Year Better for the Stock Market is a Hoax

Heard too much bullshit on this topic lately so let’s clarify this issue once and for all.

Following is a chart with 2 distributions.

Top one (middle pane) is the distribution of yearly net changes in percentage since 1929.

Bottom one (bottom pane) is the distribution of same measure for the election years only.

What have we learned from this?

• The normal bias for any year is 67% of the time since 1929 Dow has a net positive year. i.e. close of the previous year is less than the close of the current year
• For the election years it is 66.7% which is weaker in comparing to the normal bias. It also means any other year that is not an election year actually has better chance of closing the year positive because the election years dragged the rate lower
• There are only 21 election years since 1929 so the statistics is not even that convincing because there is not enough samples to start with
• At best we can infer that the performance of election years are similar to those from normal years. Definitely not better.

Share