Argus Breaks Down Historical Effect Of Presidential Race On Stocks

The impact of presidential elections has generally been negative on the stocks, as it disrupts the three seasonally strongest months of October, November and December, according to a note from Argus Research.

Analyst Jim Kelleher noted that, since 1980, monthly gains have averaged 1.44 percent in October, 1.61 percent in November and 1.87 percent in December. The analyst noted that between 1980 and 2015, fourth-quarter appreciation on the S&P 500 has averaged 4.53 percent, almost as good as average nine-month appreciation of 4.73 percent.

Kelleher highlighted, "Since the turn of the millennium, presidential election years have been weak." In 2000, which ushered in George W. Bush, the benchmark S&P 500 fell 8.1 percent, and when Obama became president in 2008, the S&P 500 declined 18.1 percent in the fourth quarter alone.

"Looking at S&P 500 capital appreciation in all presidential election years since 1980, the average has been a decidedly dudly 2.8 percent. If we back out the outsized 38.5 percent decline for all of 2008, the average gain is a slightly more presidential 7.9 percent," Kelleher wrote in a note.

However, Kelleher also made note of the 25.9 percent "Morning in America" gain associated with the Reagan presidency. Excluding those gains (7.9 percent and 25.9 percent), the average presidential election year gain is 5.3 percent, or about half the average, the analyst added.