This is what I wanted to post in my prior reply to you considering your belief the markets typically rise when U.S. Presidents are elected regardless if it's Harris or Trump. Thus, our fellow Americans are typically positive people regardless who was elected as President of the United States of America but the FEDs involvement in those statistics or market tendency is not valued enough and often ignored by retail traders. --------- What Is the Presidential Election Cycle Theory? The presidential election cycle theory posits that equity market returns follow a predictable pattern each time a new U.S. president is elected. The theory was developed by "Stock Trader's Almanac," a book and newsletter series originally founded by Yale Hirsch. According to this theory, U.S. stock markets perform relatively weaker in the first two years of a term, then returns spike and peak in the third year, before falling off to various extents in the fourth and final year. The cycle begins again at the start of the next presidential term. Key Takeaways The election cycle theory is predicated on the view that shifts in presidential priorities are a primary influence on the stock market. The theory suggests that markets perform best in the second half of a presidential term, particularly in year three, when the sitting president tries to boost the economy to get re-elected or assist the candidate of his or her party. Data from the past several decades seem to support the idea of a stock surge during the second half of a presidential term, although the limited sample size makes it difficult to draw definitive conclusions. Understanding the Presidential Election Cycle Theory Stock market researcher Yale Hirsch published the first edition of the "Stock Trader’s Almanac" in 1967. The guidebook became a popular tool for day traders and fund managers hoping to maximize their returns by timing the market. The almanac introduced a number of influential theories, including the “Santa Claus Rally” in December and the “Best Six Months” hypothesis, which proposed that stock prices have a tendency to dip during the summer and fall. Hirsch’s aphorisms also included the belief that the four-year presidential election cycle is a key indicator of stock market performance. Using data going back several decades, the Wall Street historian proposed that the first year or two of a presidential term coincided with the weakest stock performance.3 According to Hirsch’s theory, after entering the Oval Office, the chief executive has a tendency to work on their most deeply held policy proposals and focus on fulfilling campaign promises. As the next election looms, the model suggests that presidents focus on shoring up the economy in order to get re-elected. As a result, the major stock market indices are more likely to gain in value. The theory and the data it's based on indicate that the largest returns come in year three of the term and the second largest returns come in the fourth year of the term. According to the theory, the results are fairly consistent, regardless of the president’s political leanings.4 The Presidential Election Cycle Theory vs. Historical Market Performance A vast number of factors can impact the performance of the stock market in a given year, some of which have nothing to do with the president or Congress. However, data over the past several decades suggest that there may in fact be a tendency for share prices to increase as the leader of the executive branch gets closer to another election. In 2016, Lee Bohl, a Charles Schwab researcher, analyzed market data between 1933 and 2015, and found that, in general, the third year of the presidential term overlapped with the strongest average market gains.5 The S&P 500, a fairly broad index of stocks, exhibited the following average returns in each year of the presidential cycle: First year: +6.7% Second year: +3.3% Third year: +13.5% Fourth year: +7.5%6 Since 1930, the average annual rate of return for the S&P 500 was 6.58%, adjusted for inflation. So while the numbers are about even in year one, and only dip in year two, which is not exactly as Hirsch predicted, it appears there truly is a third-year bump on average. However, averages alone don’t tell us whether a theory has merit. There's also the question of how frequently this third-year bump occurs. Between 1928 and 2024, the stock market experienced gains in about 67% of calendar years. But during year three of the presidential election cycle, the S&P 500 saw an annual increase 78.3% of the time, demonstrating a notable consistency. By comparison, the market gained 58.3% of the time in the first year of the presidential term and 54.2% in the second year. https://www.investopedia.com/terms/p/presidentialelectioncycle.asp ---------- wrbtrader
Whoever is elected will impact the day traders very significantly. If Trump is elected, I will increase day trading to as high as 12 hours a day. Trump has been known to provide tons of trading opportunities to the day traders. Trump will (indirectly) ensure that the day traders continue to be very, very busy with tons of trading opportunities. Trump would shake China, NATO, Europe, Mexico, Middle East .... or even the moon and Mars violently. If Harris is elected, I will reduce my day trading to 6 hours a day. Because there wouldn't be many trading opportunities. Perhaps I might even change my hobby to farming for 4 years. ______________________________
I remember months before the US bombed Iraq, the market was dead and extremely untradable. Biden (and also Harris) wouldn't shake the world so much. Trump can cause the world to spin clockwise instead of anticlockwise, and Earth's magnetic field to change polarity.
The Pandemic statistics show that there are countries that performed much better than the United States in the Pandemic due to the initial management of the health crisis in their country and the government leadership health policies. Simply, there's an obvious reason why the United States performed so poorly in the Pandemic especially in the first year of the Pandemic especially when you compare the U.S. to it's northern border country...Canada. To avoid Trump's responsibility is a pure misunderstanding of the government's healthcare policies during a global health crisis especially when that government temporarily shut down the voices of healthcare scientists in its own country to then praise witch-doctor Quacks in other countries as health advisors for America. Reminder, the OP asked if a bear market will be caused if Trump wins ? I do not think a bear market will develop because the historical statistics point to a market that says it does not matter if Trump wins or Harris wins...there will be good volatility and many brokers will be busy adjusting their margin requirements in the early days of the election. The financial markets typically enjoy a newly elected President...Republican or Democrat. Profiting in the markets will then fall upon your shoulders...not on the shoulders of the President of the United States or the FED. I would be more focused on what the FED does versus what the President does although we want to believe the President does not control the FED outside who the President decides to be the FED Chairman or Chairwoman. Simply, any President that thinks he or she can control the financial markets is a buffon. wrbtrader
After the pandemic got going, much of the policy in the US was done at the state level - not Federal. Again...people like to forget about how triggered all the liberals were about Florida not mandating masks and vaccines, and they fared much better than the liberal states that dragged performance numbers down for the entire country. The same way liberals love to drag on about gun control while never mentioning that if we subtracted all the gun crime committed by democrats in urban areas where guns are illegal, the US would have one of the lowest rates of gun violence in the world. Democrats are always eager to create problems that their beloved gov't can solve with more regulations. To OP's original question... we will likely have a bear market if Harris wins but not Trump. On the geopolitical front we would have great uncertainty about policy. Domestically, increased tax rates will be a huge drain on corporations and individuals. And before you cite Harris saying she wouldn't raise taxes on anyone making under $400K, that's a lie. Joe said it too and lied. Democrats have done all kinds of things to both the tax code and other areas over the past 4 years to cause more money to be paid out of pocket to the gov't. Biden's logic dictates that lowering the standard deduction or removing credits and writeoffs doesn't count as raising taxes. Again...people like to forget...
As traders, we want uncertainty because it creates additional volatility that then creates trade opportunities. I do not think Trump or Harris will cause a bear market but only because the historical statistics are not pointing in that direction. Yet, we know shit happens and tomorrow some bullshit global event (e.g. another war, another invasion, another global health crisis et cetera) can create a Black Swan event...triggering a drawdown in the financial markets. Watching Bloomberg today on my terminal...there has been more talk about "Tariffs" as we get closer to the November 5th elections. There's a real inflation fear now in the markets about tariffs just as much as increased tax rates now that we have some stability in the economy even though the cost of living is still too damn high and will continue to be as such regardless of who sits their ass in the White House. Regardless, I don't think domestic policy (e.g. tariffs, increasing tax rates) will trigger a drawdown. The culprit for a drawdown in the U.S. financial markets will be a geopolitical event abroad that the United States reacts to but cannot control. Whatever happens, as traders, we shouldn't care. Yet, as consumers, we're a lot more concerned because domestic policy does impact our everyday lives even for someone like me who resides in three different countries (United States, Canada, and France)... All three countries are interconnected within the financial markets but more so for domestic policy between the United States and Canada because they're border countries. wrbtrader