National Election Cycle and Stocks Over the Long Run

“Stock Market and the National Election Cycle” examines the behavior of the U.S. stock market across the U.S. presidential term cycle (years 1, 2, 3 or 4) starting in 1950. Is a longer sample informative? To extend the sample period, we use the long run S&P Composite Index of Robert Shiller. The value of this index each month is the average daily level during that month. It is therefore “blurry” compared to a month-end series, but the blurriness is not of much concern over a 4-year cycle. Using monthly S&P Composite Index levels from the end of December 1872 through August 2019 (about 37.5 presidential terms), we find that:

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