Rational Advisor

With the 2008 US presidential campaign now in full swing,

How does the stock market (using the Dow Jones index) perform during the average election year?

Since 1900, the first five months of the election year have tended to be choppy. That choppiness was then followed with a rally right up to the November election.

One theory to support this election year stock market behavior is that the first five months of choppiness is due in part to the uncertainty of the outcome of the presidential election (the market hates uncertainty) with the market beginning to rally as the outcome of the election becomes increasingly evident.

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