Election Cycles and Market Returns

We are just 28 days from the 2020 Presidential Election. Does the election cycle matter for the stock market?

Here’s the average return each month for the 4 year election cycle. I use returns since the 1960 election. I also include the 90%/10% percentile returns to give you a range.

The bottom line is there isn’t much of a pattern around the election itself.

With that said, there seems to be a big of a short-term hit right before the midterm elections and then a boost in returns after. It is statistically significant. (0.2% per month for the 2 years before, 1.1% per month after)

Overall, there is not a strong, linearly pattern between the cycle and returns.