Election Special – Interesting Historical Performance, But Limited Statistical Significance

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Graham Copley / Nick Lipinski



August 20th, 2012

Election Special – Interesting Historical Performance, But Limited Statistical Significance

  • Industrials and Basic Materials have on average and fairly consistently underperformed the broader market in the two months preceding presidential elections. The exception is the Transport sector, which has generally done well.
  • Post election, Chemicals, Capital Goods and Metals outperform. They have previously underperformed in September and October. Transports stand still post election.
  • We do not get the Transport outperformance in the September/October period in non-election years. We do not get the November-February outperformance for Chemicals in non-election years.
  • The first two conclusions are very robust in elections where there has been a Republican victory and not conclusive at all when there has been a Democrat victory.
  • The analysis is based on the last 32 years – 8 elections periods. The statistical sample set is small, in terms of time periods, but we show the analysis anyway as earlier periods may be less relevant as they had very different market participation and media coverage.

Exhibit 1

Source: Capital IQ and SSR Analysis


This is a slightly frivolous piece of research and there are others who have done exhaustive work on historic sector and stock performance around election periods. We have simply looked at the performance of our sector price indices in the September and October period preceding an election and in the November-February period; so post election and post State of the Union Address. We are not looking at who won the House or the Senate or trying to “fine tune” the analysis in any way – we are just presenting the results of our analysis. We have not included E&C as the sample set is limited and volatile through the late 1990s.

Election versus non-election

Most interesting is how different the non-election year chart looks from the election year chart.

  • In election years you get strong September/October outperformance from Transports and a little from Electrical Equipment. In non-Election years you do not get outperformance from any sector in September and October.
  • In election years you get terrible pre-election performance from Metals – in election years Metals again and Packaging.
  • Post election you want to own Chemicals and Metals, in a non election year you are better off with Packaging, Conglomerates and Capital Goods.

Exhibit 2

Capital IQ and SSR Analysis

Republican Versus Democrat

The other interesting data point is that all of the conclusions or directions we have outlined above around election years are exaggerated in years when there has been a Republican victory and almost nothing holds true in years when there is a Democrat victory. (Note that there are only three Democrat victories in the data set and two of them occurred during periods of recession).

  • The Industrials and Basic Materials space in general underperforms the broader market before and after an election in years when Democrats win, and outperforms before and after in years where Republicans win.
  • “Buy Transports ahead of the election and Chemicals post the election” is very pronounced in Republican years and does not work at all in Democrat years.
  • Buying Metals post election (regardless of winner), or in the November–February time period generally, seems to be a good idea.

Exhibit 3

Source: Capital IQ and SSR Analysis

The analysis year by year

Exhibit 4

©2012, SSR LLC, 1055 Washington Blvd, Stamford, CT 06901. All rights reserved. The information contained in this report has been obtained from sources believed to be reliable, and its accuracy and completeness is not guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein.  The views and other information provided are subject to change without notice.  This report is issued without regard to the specific investment objectives, financial situation or particular needs of any specific recipient and is not construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results.

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