Election Special

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Gone are the days when it was necessary to travel back to the place of your birth in order to vote in elections, but given the outperformance of the Transport sector in the US in the September/October prior to an election, you might think otherwise.

Generally the whole industrial and basic materials sector has a very poor September and October relative to the broader market, but Transports is the standout in election years only and specifically in election years where there is a Republican victory.   The data is influenced by very strong performance ahead of the first Reagan victory but even adjusting for this, the performance is positively different from the rest of the sectors and non-election years.

Could it be that, sensing a Republican win, we all start shipping back the assets that we had been hiding in tax havens outside the US?

Could it be that, anticipating higher growth, companies start buying inventory ahead or shipping product ahead?

The other “Republican win” outlier is that you want to buy the Chemical sector immediately post election; there is strong outperformance post a Republican victory, underperformance post a Democrat victory and underperformance in non-election years.

The Metals and Mining Sector does well in the November to February period, regardless of election year versus non-election years and regardless of who wins – but does very poorly in September/October regardless.

While this is not the most statistically robust work that we have published, it is interesting nonetheless.  Please see our published research today for more detail.

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