The Vote of the Market

Before you vote, the stock market will vote. Since 1928,* a stock market increase over the three months leading up to the November presidential election has an 82% success rate at predicting who will win. In 18 of the 22 election years going back to 1928, the gain or loss in the stock market over August, September, and October accurately predicted which party won the election. For years in which the election followed a two-term president (1940, 1944, 1960, 1988, 2000, and 2008) the track record has been perfect, but granted, this covers a limited number of occurrences.

The exceptions to the “vote of the stock market” are 1932, 1956, 1968, and 1980, when the challenger won despite stock gains, or when the incumbent won despite a stock market decline over the period. Like any market indicator, it may not be perfect for every election as extenuating circumstances may have played a role in the four exceptions. Still, the stock market’s vote has been fairly predictive over the years—something that will be interesting to watch in the coming months.


*Earliest election year for which S&P data exists.

Past performance is no guarantee of future results. All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

The economic forecasts set forth in the presentation may not develop as predicted.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.

Stock investing involves risk including loss of principal.

The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

This research material has been prepared by LPL Financial LLC.

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