Event Trading: '06 Elections

Discussion in 'Strategy Building' started by BlueHorseshoe, Aug 27, 2006.

  1. Anyone here considering a trading plan specifically mapped around US congressional elections to be held in a little over 2 months??

    A whole slew of countries held elections in 2004, also notably Japan in 2005. Many, if not most, of these elections spurred dramatic moves in stock markets and currencies.

    I'm just beginning to research the prospective impact of US Congressional elections to be held Nov 7. Thirty-three out of 100 senate seats are up for grabs, as well as all 435 seats in the House.

    Initial assumption ahead of the election is that negative electioneering immediately ahead of polls should weigh on equities.

    But, historically when one party controls the Congress and Presidency equity does worse than when Congress and Presidency are split and gridlock ensues. (Gridlock = less meddlesome government) Since Republicans control both Congress and Presidency, things can only get better, near-term, for sentiment toward equities??

    Please, no political nonsense here - this is only about the prospect for the election to prove an important pivot for equity valuations. Political views are irrelevant for this discussion.
  2. You got it.

    In mathematics, as well as politics, a double negative equals a positive. The country is historically much better off with a <b>power gridlock</b>. Keep the two lousy big parties fighting each other, and they'll have fewer resources to oppress the people.

    All this is based on the assumption that the American public will continue to be too stupid to elect Libertarians.
  3. But there may be undue expectation that Dems will do well in the polls. NYT has run articles that hedge fund managers are giving Dems $$ simply to cover their bases should Republicans lose.

    Thus, if Republicans do surprisingly well, as they did in '04, markets could be quite diappointed and sell-off.

    Either way, reaction should last more than one day and offer some opportunity.

    USD sell-off w/ Republican sweep?? USD rally with Dem landslide?? That could prove interesting ...