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82 Research Articles

Political Influences on Stock Valuation Levels

…U.S. stocks tend be be most overvalued under Democratic Presidents, under popular Presidents, during election years and during years when no new major military conflicts start.

The Political Campaign Contribution Effect

…investors might want lean toward companies that contribute to lots of political candidates (especially Democratic candidates for the House of Representatives).

Expert Political Judgment: How Good Is It? How Can We Know? (Chapter-by-Chapter Review)

…political forecasting seems a lot like financial markets forecasting, with slim evidence that the forecasters can beat simple algorithms.

Growing Political Effect?

“Seasonal Strategy for QQQ?” finds an interesting even year-odd year effect in Invesco QQQ Trust (QQQ) annual returns. The Trading Calendar and “Monthly Returns During Presidential and Congressional Election Years” find notable differences in S&P 500 Index performances for even years and odd years. A plausible culprit is federal elections. Is this effect growing over time?… Keep Reading

Short-term Equity Risk More Political Than Economic?

How does news flow interact with short-term stock market return? In their April 2019 paper entitled “Forecasting the Equity Premium: Mind the News!”, Philipp Adämmer and Rainer Schüssler test the ability of a machine learning algorithm, the correlated topic model (CTM), to predict the monthly U.S. equity premium based on information in news articles. Their… Keep Reading

Left or Right, and Up or Down

…economic activity generally transcends politics in politically free societies.

Stock Market and the National Election Cycle

Some stock market experts cite the year (1, 2, 3 or 4) of the U.S. presidential term cycle as a useful indicator of U.S. stock market returns. Game theory suggests that presidents deliver bad news immediately after being elected and do everything in their power to create good news just before ensuing biennial elections. Are… Keep Reading

Election Season Stock Market VIX Drivers

Does political drama take over as the principal driver of U.S. stock market implied volatility during election seasons? In their March 2012 paper entitled “U.S. Presidential Elections and Implied Volatility: The Role of Political Uncertainty”, John Goodell and Sami Vähämaa compare the effects of political uncertainty to those of eight other sources of uncertainty on implied stock market… Keep Reading

Recent Speculations on Prediction Markets

…many eminent economists and political scientists believe that prediction markets could offer significant benefits to society and that government should remove barriers to their productive use.

Using ChatGPT to Assess Soft Firm-level Risks

Can artificial intelligence (AI) models help investors quantify vague firm risks through textual analysis? In their October 2023 paper entitled “From Transcripts to Insights: Uncovering Corporate Risks Using Generative AI”, Alex Kim, Maximilian Muhn and Valeri Nikolaev explore the value of generative AI tool ChatGPT 3.5 in quantifying firm risks based on politics, climate change… Keep Reading