Stocks Up – Obama Wins. Stocks Down – It’s Romney: S&P’s Stovall


Throughout 24 seasons in the major leagues, Ty Cobb established himself as the greatest hitter in baseball. With more than 11,000 at-bats, the Detroit slugger delivered a lifetime batting average of .365, a record that has stood since he retired in 1928.

As amazing as Cobb's performance is, a hundred years of data show that the stock market, over the next 90 days, is more than twice as good at predicting the next President as Ty Cobb was at reaching first base.

Simply put, from now through Halloween, if stocks are higher, President Obama wins. But if the market is down come October, Mitt Romney will take over the White House.

"Since 1900, whenever the market rose from August through October (in a presidential election year), the incumbent has been re-elected 80% of the time," says Sam Stovall, Chief Investment Strategist at S&P Capital IQ in the attached video. "Whenever it falls, the incumbent has been replaced 88% of the time."

While odds like this are overwhelming, Stovall cautions, that these stats aren't guarantees. That said, his election year analytics have revealed some other notable - highly probable - trends.

Not only are August's 3% average gains the best of the so-called lead-in months, but Stovall found that 3rd quarters beat the pack as well and were also positive 61% of the time.

Putting your partisan priorities aside for a minute, my guest's 100-year study reveals a huge 78% chance that the annual low already occurred in the first half (which happened in January and June this year), as well as a shocking 85% chance that the annual high for 2012 will occur in the 2nd half, and even more likely in the 4th quarter.

While he says some investors sometimes see market rallies as a ''sigh of relief'' that change is coming, his research shows the opposite to be true.

View Comments (2)