Sheaff Brock Reviews the 2020 Election Chartbook

INDIANAPOLIS, Aug. 6, 2020 /PRNewswire/ -- Sheaff Brock principal Dave Gilreath assessed the relationship between presidential election outcomes and the history of stock market returns to consider what may be ahead for the 2020 election.

Mark Twain said, "History doesn't repeat itself, but it often rhymes." Historical data compiled by Strategas Research Partners revealed implications of U.S. national elections on the S&P 500's average annual performance since 1933.

Based on this research and current election probabilities, Gilreath asserts the best post-election market returns would occur if Biden wins the Presidency, the House stays Democratic, and the Senate remains Republican. Occurring only four years since 1933 (Democratic President, split Congress), this scenario has averaged market returns of 13.6%.

The second-best market option is a Democratic sweep. During 34 years since 1933, average or slightly above-average returns of 8-10% annually were realized with Democrats in control as President and holding majorities in both House and Senate. Since 1950, Democratic control has existed in 18 years, generating annual market returns of 13.2% overall with positive returns in 83% of those years.

Third-best market predictions are with President Trump reelected and no change in control of the House or Senate (Republican President, split Congress); S&P 500 annual returns historically have averaged 9%. Lastly, odds of Trump winning with both House and Senate achieving Democratic majorities are extremely low (history shows this combination generating poor returns of 3-5% annually).

Strategas used historical data to accurately predict Trump's victory in 2016 while he was still considerably low in the polls. When S&P returns trend upwards during the three months prior to Election Day, the incumbent party has won 87% of the time since 1936 and 100% of the time since 1984. However, when stock market returns trend downward during those pre-election three months, the incumbent has almost always lost.

Looks like we may be able to predict the 2020 Presidential election outcome by October 31st.

About Sheaff Brock:
Sheaff Brock is an SEC-registered, fee-only independent investment firm striving to enhance portfolios of growth- and income-oriented investors, managing $900.4 million in assets nationwide as of 6/30/2020. Sheaff Brock principal David Gilreath contributes investment news to CNBC.com, Seeking Alpha, and WealthManagement.com. Visit Sheaff Brock YouTube for information.

Disclaimer: 
Sheaff Brock Investment Advisors, LLC ("SBIA") is an SEC-registered investment advisor founded in 2001. Clients or prospective clients are directed to SBIA's Form ADV Part 2A prior to deciding to participate in any portfolio or making any investment decision. The views and opinions in the preceding commentary are subject to change without notice and are as of the date of the report. There is no guarantee that any market forecast set forth in the commentary will be realized. This material represents an assessment of the market environment at a specific point in time, should not be relied upon as investment advice, and is not intended to predict or depict performance of any investment.

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