Torturing The Data: Mid-Term Elections Implications

Summary

• The stock market does, in fact, show an upward bias in the 12-month periods following mid-term elections.
• Consider how all the S&P 500’s one-year returns stack up since 1952. Clearly, there’s a strong positive skew.
• The point here is that it’s all too easy to assume that the stock market rises or falls because of one factor - mid-term elections in this case.

Torsten Asmus/iStock via Getty Images

It's been tempting in recent weeks to look at the stock market's performance following US mid-term elections as biased upward for reasons linked to a special factor that prevails after voting. This is probably narrative mining