Predicting the Election Cycle in US Stock Prices : Guinea Pigs versus the Pros
Journal
Applied Economics Letters
ISSN
1350-4851
ISSN-Digital
1466-4291
Type
journal article
Date Issued
2010-01-08
Author(s)
Abstract
The notion that US stock prices follow a pattern that is synchronized with the rhythm of presidential elections has been a topic among financial investors for a long time. Academic work exists that supports this idea, quantifies the pattern, and has demonstrated its robustness over several decades and across parties in power. This paper takes the existence and robustness of this presidential election cycle for granted and asks whether individuals exploit it when asked to predict stock prices. It considers and contrasts two types of such forecasts: Those made by professionals included in the Livingston survey; and those made by students in a laboratory experiment. One key result is that neither group fares particularly well, though participants in the lab experiment clearly outperformed the professionals
[This is a shortened version of my 2008 discussion paper with the same title]
[This is a shortened version of my 2008 discussion paper with the same title]
Language
English
Keywords
Livingston survey
experiment
expectations
forecast
presidential election cycle
stock prices
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Routledge
Publisher place
Oxfordshire
Volume
17
Number
18
Start page
1759
End page
1765
Pages
7
Subject(s)
Division(s)
Eprints ID
55808