Want to know who will win the United States presidential election? Take a look at the stock market.
Of course, there is no crystal ball to tell us who will prevail on November 5.
The polls, as much as they can be trusted, show Vice President Kamala Harris and former President Donald Trump running neck and neck in what many observers believe could be the closest election in decades.
Even so, the performance of US stocks has an uncanny track record of predicting the outcome of presidential elections.
Since 1928, the S&P 500 – which tracks the performance of 500 of the largest firms listed in the US – has pointed to the winner in 20 out of 24 elections, according to an analysis by financial services company LPL Financial.
When US stocks were up during the three months before election day, the incumbent party kept the White House on 12 out of 15 occasions. And the party in power lost eight out of the last nine times that the market was in negative territory leading up to the vote.
It is not a bad track record as forecasting models go.
With less than two weeks until the election, the S&P 500 is up a healthy 11.8 percent since early August.
Assuming US stocks do not take a dramatic tumble in the final days of the campaign, the historical trend clearly favours Harris.
However, caveats abound.
Unfortunately for Harris, voters do not appear to associate the stock market’s strong performance with the economy doing well.
While an estimated 61 percent of Americans own shares,…
