Is there a presidential cycle? Courtesy of Adam Warner, at Daily Options Report. ![[mary-tyler-moore-statue.jpg]](http://3.bp.blogspot.com/_dFwaKOYqt-A/SMRJ-RHTZUI/AAAAAAAADbc/cxJF4wqaL-g/s1600/mary-tyler-moore-statue.jpg)
Careful What You Wish For?
As the city of Minneapolis erects this long overdue tribute to Sarah Palin throwing her hockey helmet and lipstick in the air, Jason Zweig makes a compelling case why "If You Bet on the Election, Don’t Use Real Money" (hat tip Abnormal Returns).
Every four years, as the clatter of the presidential campaign reaches a crescendo, Wall Street adds its voice to the din. Financial pundits spew forth one nostrum after another, often contradictory, never documented with evidence and always tailor-made to spur investors into making more trades. If you haven’t yet heard "The stock market prefers Republicans," you will soon hear "The stock market prefers Democrats" or "Gridlock is good for investors."
Now that we know it’s McCain and Palin against Obama and Biden, let me tell you three things about the "presidential cycle" in stock returns. There’s not much to it, most of what you hear about it is wrong and there’s no reliable way to make money on it.
He runs some data that concludes that about the only *rule* that has any validity is that small stocks do indeed outperform under a Dem. president. And even there, it’s late in the cycle of small outperformance.
I would disagree though that all the nonsense is about fee generation. To me it’s more "take your worldview and retro-fit a random market move to confirm that world view". Power Lunch of course the lead culprit, but there are many.
But in any event, for some intelligent analysis of what might actually happen in the investment realm, check out out Election Stocks, courtesy of Jeff from A Dash of Insight.
