We have just experienced a not-so-good week for the most followed stock indices. The S&P 500 (500 largest U.S. companies by market capitalization), DJIA (30 largest industrial companies), and NASDAQ (technology sector index) ended the week down by 1.94%, 1.50%, and 2.27%, respectively, while since the beginning of the year they are slightly up by 2.02%, 2.66%, and 0.78% (excluding dividends). International stock markets followed the U.S. stock indices, with the Japanese Nikkei 225 ending the week down by 2.74%, the German DAX down by 4.09%, and the British FTSE 100 down by 4.31%. The market has been volatile in recent days ahead of the presidential election in the U.S. Tuesday is decision day, and a tight race is underway between Hillary Clinton and Donald Trump. Let’s look at the statistics and historical overview of market returns before and after elections, and whether this can be a decision-making tool in the investment process and achieving higher returns.
According to data from Global Financial Data, Inc. for the period from 1928 to 2016, if the U.S. president were to come from the ranks of the Republicans, the return on capital markets in the election year would average 15.5%, while in the following year it would only be 0.70%, compared to a return of 7.4% in the election year and 16.2% in the year after the election if the president were from the Democrats. According to BMO Private Bank Strategy statistics for the period from 1900 to 2015 (for the DJIA index), we find even more interesting data. In the case of a Republican candidate winning, i.e., if they had a majority in the Senate, the average return was 6.9% compared to 4.6% if the Democrats had the majority in the Senate. On the other hand, if the president were a Democrat and they also had a majority in the Senate, the return was 7.5% compared to 11.2% when the Senate was controlled by Republicans.
Let’s look at the chart showing the S&P 500 index for the period from 1928 to 2016, and how much could have been earned if funds had been invested the entire time, as well as the case of avoiding investments in election years. It is evident that significantly more could have been earned by holding a portfolio throughout the entire period, i.e., 9.5% compared to 7% when skipping election years. Chart 1 shows how much a $10,000 investment made in 1928 would have grown to today, and how much the same investment would have grown without returns in the election year. Historical returns have shown the advantage of investing or holding a portfolio in election years, i.e., throughout the entire period.
Chart 1 – Return of the S&P 500 Index with and without the Election Year
Table 1 – Return of the S&P 500 Index with and without the Election Year 
During the week, the announcement of quarterly financial reports continues, and you can follow the business results in our regular section Trading Room.
The corporate sector has reported better-than-expected business results in recent weeks, with some disappointments. We bring you an overview of the most interesting companies (with a market capitalization of over five billion USD) scheduled for this week. What awaits us this week and which companies will announce quarterly financial reports about their business can be read below.
Monday: Albemarle Corporation (ALB), Align Technology Inc. (ALGN), Apple Hospitality REIT, Inc. (APLE), Cognizant Technology Solutions Corporation (CTSH), CST Brands, Inc. (CST), Diamondback Energy, Inc. (FANG), Ferrari N.V. (RACE), First Data Corporation (FDC), Grupo Financiero Galicia S.A. (GGAL), The Howard Hughes Corporation (HHC), International Flavors & Fragrances Inc. (IFF), Jack Henry & Associates Inc. (JKHY), Live Nation Entertainment, Inc. (LYV), Marriott International, Inc. (MAR), MGM Resorts International (MGM), Microchip Technology Inc. (MCHP), News Corporation (NWSA), Opko Health, Inc. (OPK), PerkinElmer Inc. (PKI), The Priceline Group Inc. (PCLN), Rockwell Automation Inc. (ROK), Scripps Networks Interactive, Inc. (SNI), Sysco Corporation (SYY), WestRock Company (WRK)
Tuesday: AerCap Holdings N.V. (AER), Amdocs Limited (DOX), Ashland Global Holdings Inc. (ASH), Cinemark Holdings, Inc. (CNK), Concho Resources, Inc. (CXO), CVS Health Corporation (CVS), DR Horton Inc. (DHI), DR Horton Inc. (DHI), Expeditors International of Washington Inc. (EXPD), Gaming and Leisure Properties, Inc (GLPI), Jazz Pharmaceuticals Public Limited Company (JAZZ), Johnson Controls International plc (JCI), Liberty Broadband Corporation (LBRDA), QVC Group (QVCA), The Liberty Media Group (LMCA), Middleby Corp. (MIDD), TripAdvisor Inc. (TRIP), US Foods Holding Corp. (USFD), Valeant Pharmaceuticals International, Inc. (VRX), Westlake Chemical Corp. (WLK), Zayo Group Holdings, Inc. (ZAYO)
Wednesday: AMERCO (UHAL), AmeriGas Partners LP (APU), Atmos Energy Corporation (ATO), Broadridge Financial Solutions, Inc. (BR), Coty Inc. (COTY), CSRA Inc. (CSRA), Dish Network Corp. (DISH), Flowers Foods, Inc. (FLO), Hospitality Properties Trust (HPT), Mylan N.V. (MYL), NetEase, Inc. (NTES), Norwegian Cruise Line Holdings Ltd. (NCLH), Santander Consumer USA Holdings Inc. (SC), Sunoco Logistics Partners L.P. (SXL), UGI Corporation (UGI), Viacom, Inc. (VIAB), The WhiteWave Foods Company (WWAV)
Thursday: 51job Inc. (JOBS), Blue Buffalo Pet Products, Inc. (BUFF), Coca-Cola European Partners Plc (CCE), Continental Aktiengesellschaft (CON.DE), Cotiviti Holdings, Inc. (COTV), Cotiviti Holdings, Inc. (COTV), Kohl’s Corp. (KSS), Macy’s, Inc. (M), Manulife Financial Corporation (MFC), Michael Kors Holdings Limited (KORS), Microsemi Corporation (MSCC), Nordstrom Inc. (JWN), NVIDIA Corporation (NVDA), Perrigo Company plc (PRGO), Porsche Automobil Holding SE (PAH3.DE), Ralph Lauren Corporation (RL), The Walt Disney Company (DIS)
Friday: Allianz SE (ALV.DE), J. C. Penney Company, Inc. (JCP), Weibo Corporation (WB)
For all other companies, you can follow the announcement of quarterly reports on Yahoo Finance
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The content of this article does not constitute investment advice nor should it be construed as a recommendation for trading in capital markets and other financial markets. The author disclaims any responsibility and is not liable for any potential loss incurred from trading based on this analysis. The ideas expressed in this analysis are solely the opinion of the Author and not the company in which they work. Everything presented in the article is written solely for educational purposes. Before starting to trade, it is important to understand the risks associated with trading financial instruments and financial products. Trading in stocks, ETFs, futures contracts, currencies (FX), CFDs, options, leveraged financial instruments, and other financial instruments involves high risk, and there is a possibility of losing the entire deposit and more. You and only you are responsible for your investment decisions. The only recommendation we give is to consult with a licensed investment advisor.
