I am sure by now everyone knows that Donald Trump appears to be going into the November election as the Republican nominee. I am also sure that the title of this blog release causes some form of reaction in you. Many friends and clients have asked me the past few months, “Can Trump really be the next President of the United States?” I will answer that question with a few interesting points of data regarding the stock market and elections.
From experience, I believe the stock market is a very good indicator of who will win the election in November. For me, there is no need to be glued to the debates, the Saturday Night Live skits, Facebook discussions, etc. I firmly believe that, if you become a student of history and learn to understand trends, the stock market is a leading indicator of many things, including the Presidential election. In 2008, I told many people in Indiana (typically a Republican state) that Barack Obama would be our next president. Quite a few thought I was off my rocker, but I have found that the stock market is one of the strongest trend indicators for election results. After Barack Obama won a landslide victory in the 2008 election (he even won the state of Indiana), I did further research on the subject. Here are some interesting findings in presidential elections since 1928:
So 19 of 22 elections went with the stock market trend; that is 86.4% accuracy, which is pretty strong!
So can/will DonaldTrump be our President in 2017? It is too early to forecast, but here are a few other factors to consider:
In conclusion, if you want Donald Trump to be President, trends suggest you need a bear market in stocks to get him the votes needed. The months of May through October should hold the answer to who will win the election in November 2016. If the DOW stays above 17,500 by the time of the election, the stock market favors the Democrat nominee (which appears to be Hillary Clinton). If the stock market turns back down and goes back to the lows of February 2016, the stock market favors the Republican nominee (which appears to be Donald Trump). At an 86% predictability rate, that is a pretty strong trend.