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US Elections vs. the Stock Market

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With the upcoming USA governmental election, lots of capitalists are stressed over how the political election outcome will certainly impact their investments. This is not a new concern – political elections are stressful times as well as it seems apparent that the result ought to affect the stock exchange. Rhetoric from throughout the political spectrum certainly doesn't help.

The good news is, the relationship between stock exchange, elections, as well as political parties has actually been researched thoroughly, permitting us to go back from the unsupported claims to take into consideration the historic data and the theories that explain it.

Referenced in this video clip:

Political Climate, Positive Outlook, and Financial Investment Choices:

With Greater Uncertainty Comes Greater Volatility:

The Presidential Problem: Political Cycles and also the Stock Market:

What Relocations Stock Rates?:

Political Cycles and Stock Returns:

Time varying threat aversion:

Upholder Financial Cycles:

Unemployment and also the Democratic Electoral Advantage:

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50 Thoughts to “US Elections vs. the Stock Market”

  1. Edward Mauer

    Correction, Bush did not lose to Obama. He ended his second term and couldn’t run again. McCain lost to Obama. Though your point still stands if you were to say more precisely that it went to Democratic leadership from Republicans.

    1. boot live

      Heard that and immediately scrolled down to see if it had been commented on.

    2. Langston Tucker

      @Ben Felix Respect.

    3. Pradyot Rai

      Greater point that was probably not touched is the election that brought George W Bush to power — is that was unturned, USA would have seen a completely different path. We would have had greater economic expansion without gobbling so much debt.

    4. Mr Moore

      @Ben Felix its okay. Great video!!You are probably from a more united, educated & advanced country like Canada 🇨🇦

  2. utubeaddict29

    Engagement for the algorithm. Great video as always Ben.

  3. Nerd Life Lab

    I love the data and research. I’m sure it took you a long time. Really appreciate it because I would never do it myself. Well done. Great channel.

  4. Chad High-Five Flexington

    Man, how did I get lucky enough to find you and your videos right when I’m considering opening an investment account?

    Data, facts, a clean no nonsense explanation that’s rooted in reality and common sense.

    You consider most if not all logical fallacies of investing and give a beautiful explanation of what the research says instead of what ‘experts say’.

    Love the content, subbed for life.

    1. GlobusTheGreat

      Same, literally perfect timing. But what do the data say about our timing? Is it expert attention managers that produce these disproportionate outcomes, or is it a common factor that causes one to begin investing and also find Ben Felix’s channel around the same time? Eugene Fama found in a landmark paper that it is the act of searching for valuable info that leads one to find Ben Felix, which naturally happens as one begins investing, and not a miraculous outcome resulting from active attention manager skill. I need to go to sleep, and with such mental volatility in my mind there is no way to know in the short term if what I’m typing out will make sense to anyone else, but it is this very act of taking on the risk of posting it that leads to returns in the long run (though in this instance it may not be a compensated risk).

    2. Guilherme Matuella

      @GlobusTheGreat Haha gave me a chuckle, guess I got good returns when I risked my time reading your comment

    3. Arien

      @GlobusTheGreat hilarious!!

  5. Malcolm Morgan

    You’re literally the best financial YouTuber out there

    1. Marc L

      him and The Plain Bagel

    2. JOSÉ VICTOR ROLING

      By far

    3. Mr Negative

      he aint George Gammon

  6. Hassan Tahan

    Literally blew my mind when you flipped the correlation. It is the riskiness determining the government, not the other way around.

    1. Martin Schwoerer

      if it literally blew your mind, then I literally fear for your mental health

    2. Hassan Tahan

      @Martin Schwoerer I literally don’t care

    3. Bankai Hadouken

      @Hassan Tahan i literally agree

  7. Bonk

    “This time, it’s different”.

    1. Jo

      yeah that rona thing

    2. Jevon Nicol

      Investors famous last words before the bubble bursts..

  8. Felipe Behrens

    Oh… maybe now the small cap value will catch up to growth…

  9. Big Orange_大橘为重

    All in all, elections really don’t matter in the long term

    1. Yianni Mitropoulos

      Totally wrong. Elections have a big impact on which tariffs/taxes/subsidies/regulations are introduced or removed, which can cause large fluctuations in the profitability of specific industries.

    2. JOSÉ VICTOR ROLING

      @Yianni Mitropoulos Yea but its all already priced, so it literally doesnt matter brotha

    3. Yianni Mitropoulos

      @JOSÉ VICTOR ROLING To some extent you’re correct. But the underlying attitude is defeatist, and frankly self-destructive. At any point in time, there’s always many considerations that have yet to be priced in appropriately, which is where the money is of course. For example, solar is quite cheap right now, despite the triple-upside potential of (a) the certainty of an end to COVID leading to higher electricity prices (b) the possibility of a Biden-supported incentive scheme for renewables, and (c) the certainty of an impending battery revolution. Obviously, the market hasn’t fully priced these factors in yet, perhaps because other stocks are currently “hot”.

    4. JOSÉ VICTOR ROLING

      @Yianni Mitropoulos Yeah I understand and respect your point bro, but I have 2 considerations to make:
      .
      1. Here in this yt channel we believe that the market is very efficient when processing information into stocks prices, so, as we think that the market is very efficient, we believe that there isn’t “cheap stocks” or any relevant annomaly that allows we to generate alpha
      2. even in a more inefficient market, the elections would still be priced in a efficient form, because is one of the events that the market cares the most

  10. Sergio Maldonado Delgado

    I entered investing back in August, and your videos are a godsend. In a climate where stock market grifters dominate content and a bunch of communities, data driven analysis is both scarce and valuable. Thanks a lot.

  11. Mindaugas Pakštas

    Dude, this would have been perfect 3 months ago when I was writing my Finance Msc thesis about markets and elections. However, I very much enjoyed it regardless.

    Watching this video was bizarre though, seeing you quote papers that I was reading reasonably recently too.

    1. Ben Felix

      Since you just wrote your thesis, what else would you have added to the points in the video?

    2. Mindaugas Pakštas

      @Ben Felix Not too much to add,
      I did an Event study on the 2019 UK general election and found statistically insignificant returns in Fixed income markets during my event window. Which confirms what you said in terms of short term returns.
      As this election was colloquially seen as a Brexit election as Brexit was the majority of voter’s main concern in regards to their choice of party, I looked at if there were statistically significant returns in major EU economies too.. there was not..
      The nature of my course meant my thesis only needed to be 8,000 words. So I acknowledged that parts of my research lacked the depth to be conclusive.

      I concluded that any significant market changes were far more likely to be caused by ripples from the US-China trade war, than the election..

      I get my grade back in around 2 weeks, for all I know, my research could have been total nonsense. To be seen.

    3. Ben Felix

      Very interesting. Seems to align with everything else I read. I hope you get a good grade!

  12. F F O

    “Individuals become more optimistic and perceived the market to be less risky when their political party is in power”. Best quote in the video.

    1. Edward Mauer

      I’m not sure this would hold true if socialists/communists came to power. Russian and Chinese stock markets went to 0 during the last century after a communist take over.

    2. TrueIQ21

      @Edward Mauer The communists in Russia and China came to power not through the elections, but as a result of a revolution and/or civil war. Civil war followed by a nationalization of all private companies is a fair reason for stock market to go to 0.

      What I’m basically saying: you cannot generalize the statements about winning democratic elections to a situation of a civil war.

    3. Edward Mauer

      @TrueIQ21 Fair point, but if the ideology we’re talking about is nationalization of all private industry, does it really matter how they came to power? Would stocks still exist in such a scenario? Maybe maybe not

    4. john calligan

      @Edward Mauer modern communists are still half capitalists. It is as much about personality types, disenfranchisement, nepotism, and inheritance as it is ideology. If the EITC jumped up another 15k, the floor would fall out from under the left, because the system would take care of more people and give them due respect for work.

    5. Lovecraft

      The difference between real risk and perceived risk.

  13. james kresl

    Great video. Point of correction: Obama beat John McCain in the 2008 election. Bush had already served two terms.

    1. Ben Felix

      Thank you. I have pinned a comment with the correction.

  14. Tyler Goodrich

    Ben, he’s never going to give you a reason to time the market 😄. Stay rational people, don’t sell your index funds or ETFs.

  15. G L

    Dude do you have a life? You’re researching machine!

  16. JOSÉ VICTOR ROLING

    Where your quarentine beard at?? Missing it haha

  17. Jacob TJ

    Trump looses, tariffs gone, tariffs gone, economy rises simple, i think stock will jump if democrats win

  18. Avent Eva

    I just noticed he doesn’t blink at all

  19. thehALomolov2

    8:13 Obama didn’t run against Bush… Bush already did two terms, Obama won the 2008 election against John McCain.

    1. Ben Felix

      ^pinned comment. Thanks.

  20. Theresa Morgan

    I am new to the market, all I know is that when Trump took office DOW was around 18….after 3 years of Trump DOW hits 30…then pandemic DOW hits 18….then now recovering…who knows!

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