Election Day

Article on Fool.com:

You’re going to see more versions of “If X wins the election tomorrow, here’s what stocks will do” over the next 24 hours than you can shake a stick at.

Try as hard as you can to ignore it all. History makes one thing clear: There is little correlation between elections and stock performance — particularly in the short run.

This is long term and I am more interested in the days after Sunday Times:

MARKETS are braced for a dip after the American election on Tuesday, especially if Barack Obama is re-elected.

Equities have declined on the day after a US election in 8 out of the last 12 contests, according to research by Capital Spreads, the spread-betting site. The biggest dip was after Obama’s victory in 2008, when the S&P 500 fell 5%.

Shares have fallen after a Democrat victory on four out of five occasions, by an average of 1.54%, compared with four out of seven for the Republicans and an average of 0.88%.

“We might also expect to see more volatility in the US markets this week. The past four elections led to a rise or fall of more than 1% — far more than the eight elections before them,” said Angus Campbell, head of market analysis at Capital Spreads.

The greenback could weaken following the election as markets focus on the $600 bn spending cuts and tax rises that are due to come into effect in January.


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