Predicting the Presidential Election Cycle in US Stock Prices: Guinea Pigs versus the Pros

Manfred Gärtner ()

University of St. Gallen Department of Economics working paper series 2008 from Department of Economics, University of St. Gallen

Abstract: The notion that US stock prices follow a pattern that is synchronized with the rhythm of presidential elections has been a topic among financial investors for a long time. Academic work exists that supports this idea, quantifies the pattern, and has demonstrated its robustness over several decades and across parties in power. This paper takes the existence and robustness of this presidential election cycle for granted and asks whether individuals exploit it when asked to predict stock prices. It considers and contrasts two types of such forecasts: Those made by professionals included in the Livingston survey; and those made by students in a laboratory experiment. One key result is that neither group fares particularly well, though participants in the lab experiment clearly outperformed the professionals.

Keywords: Livingston survey; experiment; expectations; forecast; presidential election cycle; stock prices (search for similar items in EconPapers)
JEL-codes: C91 D84 G12 G14 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2008-03
New Economics Papers: this item is included in nep-exp and nep-pol
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Journal Article: Predicting the presidential election cycle in US stock prices: guinea pigs versus the pros (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:usg:dp2008:2008-06

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