This is particularly true for small values

The possible victory of Barack Obama in the US election is good news for Wall Street according to the electoral cycle stock American. This strange phenomenon, studied for decades, attest without reserve that Wall Street registers much better performance during democratic presidencies than Republican (see illustration). The difference in performance exceeds up to 9 per year. The crashes of 1929 and 1987 intervened for example under Republican presidencies, and President Nixon has been in power the longest bear market that have been the United States of America, between 1969 and 1974.

Chances of re-election

Conversely, the major phases of flight of the actions of the 1960s and 1990s produced under democratic presidencies (Kennedy, Johnson, Clinton). Equity markets are also less volatile under democratic presidencies. This fellow and electoral cycle American is not completely independent of the economic and financial cycle. It may find its source in the preferences and priorities (unemployment, growth, taxation...) of the two parties in the conduct of economic policy. He is also influenced by the cycle of the Federal Reserve, the US Central Bank, relaxed or monetary tightening.

U.S. stock markets are also strangely in the second part of the presidential, democratic or Republican mandate, and in particular the 3rd year. This is particularly true for small values. Thus, between 1957 and 2004, they grew by an average of 38 grade, for a gain of 12 the 1st year, and 3.4 2nd (1). For large values, the figures are respectively of 23.8, 6.9 and 4.9. The best performance of Wall Street in the second part of the mandates could be explained by the tendency of power, regardless of its label, to worry more in addition to his re-election as approach the end of his first term: opportunistically, he would place crossover and amend its economic growth, employment policy and to increase his chances of re-electionthat Wall Street would appreciate...

National sport

One of the great games of brokers is to recommend the industries likely to benefit more a Republican or a Democrat President. Examples energy or defence for the Republicans. But "a strategy that would favour certain sectors based on the color of the ruling party would generate no significant return for investors", note the researchers at Massey University in Auckland (2). However, investors can exploit certain anomalies in the stock prices of some companies, based on their proximity to one of the two parties (read below). For their part, more modestly, individuals can them engage without restraint in what remains a national sport, the political bet. Indeed, as early as the 19th century, it is very common in most cities, the bettor is bringing in large halls or prestigious hotels (Waldorf Astoria...). The peak was reached shortly before the new century. After that, things get complicated. States, including New York, still tightening their legislation. But they seem to be overwhelmed by the popular enthusiasm and a sprawling underworld that removes of lucrative profits. At the end of the second world war, organized political paris markets have virtually disappeared: the Americans who lost everything in the depression prefer them including horse racing, legalized in 1939 in New York. It was only in 1988, with the "Iowa Political Stock Market", that political paris make their return to grace on Wall Street, but for amounts limited of 5 to 500 $.