Report: Stocks Are 90 Percent Accurate in Predicting Election Winner

Tuesday, 28 Feb 2012 07:57 AM

By Dan Weil

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If history is any guide, President Barack Obama better hope that the stock market keeps rising if he wants to win re-election in November.

The stock market has been the most reliable predictor around for more than 100 years when it comes to who will win presidential elections, according to a report from InvestTech Research, reports U.S. News & World Report

Indeed, the market has been accurate in 25 out of the 28 elections since 1900. If stocks rise in the two months preceding the election, the incumbent party wins. If not, the out-of-power party wins.

Editor's Note: Wall Street Insider Exposes Death of Main Street America

"The election is a reaction to the stock market. If you see strength in the marke consumer sentiment and confidence among the voters is higher,” Eric Vermulm, an InvestTech Research senior portfolio manager tells U.S. News.

“If you see volatility, you are going to see investors take that out on the incumbent."

Of the 28 elections since 1900, the rule was broken only three times: 1956, 1968, and 2004.

Vermulm says stocks look poised for further gains, though he acknowledges that November is a long ways away.

Renowned stock guru Robert Prechter agrees with the forecasting power of the stock market. And at the end of 2011, he predicted a bad 2012 for stocks and Obama.

"Stocks are likely to be lower. And if that's true, the incumbent is likely to be thrown out," he told Yahoo.

Editor's Note: Wall Street Insider Exposes Death of Main Street America

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