A Merrill Lynch Analysis finds gridlock good for the market and examines it's impact on sectors (via The Kirk Report). Even more to the point, CXO Advisory examines a paper that finds, among other things, that "stock index volatility is lower when Congress is not in session," and "annualized returns are therefore 2%-6% higher when Congress is out of session."
Financial Sense has some detailed statistics on elections and market performance.
Barry Ritholtz examines some studies and data.
Automated political risk analysis - "Researchers at Harvard and Ohio State University have been working for the past 6 or so years on an automated Political Crisis Early Warning System that anticipates the worst case scenario --internal armed conflict."
Econoblog looks at how election shakeups affect the economy.
Election prediction markets and how they react to political blunders.
What really wins elections: "An uncanny correlation exists between social mood trends and the success or failure of incumbent politicians, and this relationship doesn't end at The White House. Social mood affects everything from the elections for U.S. Congress and governors' offices to your city council and school board. "
Quant Investor does a pre-election analysis.
CXO Advisory asks "is there a significant positive correlation between company campaign contributions and stock returns?" Among their conclusions: "The number of candidates a company supports is a significant positive indicator of the company's future stock returns. A one standard deviation increase in the number of candidates supported indicates a 0.5% increase in monthly returns. This effect is larger than the value premium and the size effect, and is about as large as the momentum effect." Their bottom line conclusion: "In summary, investors might want lean toward companies that contribute to lots of political candidates (especially Democratic candidates for the House of Representatives)."
The Presidential Year Cycle: "In summary, there appears to be some connection between the presidential term cycle and stock market performance, with Year 3 the best and Year 1 the worst."
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