🗳️ HOW DO PRESIDENTIAL CHANGES AFFECT THE MARKET? 🗳️
The US market is the most relevant in the world. What happens there, it will impact in others. That has made plenty interpretations about the impact of elections on the market behaviour. Political verbiage aside, what has been the market's performance one year before and one year after each presidential changeover?
The chart shows the above. In blue, it is the performance from one year before to the change date. In red, it is the result from the change date to one year after. For the first case, the average return was ≈ 5% and the median ≈ 7%. For the second, the average returns were ≈ 9% and ≈ 13%, respectively. In general terms, the probabilities are usually positives for any scenario (≈ 71%). In fact, the worst results have been before the changeover, but the more probabilities to have a bad return is after.
The occurrence of cases before the presidential changeover, for a negative return was ≈ 23% against ≈ 77% for a positive one. For the after cases, was ≈ 34.6% for a bad result and ≈65.3% for a good. However, there were ≈ 40% of probabilities that all the negatives return happened before the change against ≈ 60% after the change. In contrast, all the positives return happened ≈ 54% more times before than ≈ 46% after.
In summary, from all the 52 items analyzed, the probability that a negative return happens just before the changeover is ≈ 11.5%, and that happen after is ≈ 17.3%. The probability that just a positive return happens before is ≈ 38.5%, and that happens after is ≈ 32.7%.
The worst and best results were for Roosevelt. The Big Crack was from October 1929 to June 1932, it does not coincide with any changeover. Finally, under normal conditions, if all the returns are considered, the Value at Risk with 95% of probability is ± 33%. It is undoubtedly also a good graphic for reflecting on the social events of the time.
Changeover | President
mar-21 Warren G. Harding
ago-23 Calvin Coolidge
mar-29 Herbert Hoover
mar-33 Franklin D. Roosevelt
mar-37 Franklin D. Roosevelt
abr-41 Franklin D. Roosevelt
abr-45 Harry S. Truman
ene-49 Harry S. Truman
ene-53 Dwight D. Eisenhower
ene-57 Dwight D. Eisenhower
ene-61 John F. Kennedy
nov-63 Lyndon B. Johnson
ene-69 Richard Nixon
ago-74 Gerald Ford
ene-77 Jimmy Carter
ene-81 Ronald Reagan
ene-85 Ronald Reagan
ene-89 George H. W. Bush
ene-93 Bill Clinton
ene-97 Bill Clinton
ene-01 George W. Bush
ene-05 George W. Bush
ene-09 Barack Obama
ene-13 Barack Obama
ene-17 Donald Trump
ene-21 Joe Biden
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J. Joel Padilla
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