1 of 2

Write now Article Tools

Page 2 of 3

capital market performance is market psychology. Market psychology includes the sentiments and confidence levels of investors during specific time periods, and in this case that time period is the election year. Market psychology can be measured through surveys, online opinion polls, investment patterns, consumer behavior etc. These measurements can consequently be tested for validity using statistical analysis.

One type of statistical analysis is statistical hypothesis testing through comparing null and alternative hypotheses and then weighing statistical significance using p-values. This method takes to positions i.e. alternate and null-hypothesis such as election years are favorable to capital markets and election years are not favorable, and tests them for accuracy using market information. In other words, hypothesis testing is another way to measure the accuracy of the relationship between variables.

If a sample population is surveyed on their confidence level in the capital markets during election years, the results may demonstrate the alternative hypothesis of favorable confidence in the capital markets is present thus validating the market psychology theory behind the capital market performance given statistical significance i.e. accuracy as measure by P-values.

Administrative Behavior and Ensuing Hypothetical Influences on Capital Markets:

Additional considerations one might give to the historical performance of capital markets during election years is the behavior of Government officials and Government agencies in election years. One such pattern of behavior includes the actions of the U.S. Federal Reserve Bank and the President, or the campaign platforms of Presidential candidates and legislation passed by the House of Representatives and the Senate.

While such election year behavior and administrative actions may be influential factors on capital market performance, drawing the conclusion such actions were intended and originated to influence the capital markets can be considered speculation as Governments have more than capital markets on their political agendas, i.e. the economy in general, base demographic support, legislative agendas, international politics etc.

The aforementioned campaign agendas of Presidential candidates may further inspire sectors of the capital markets that would be beneficiaries of the presidential platform. For example in 2008, the prices of gasoline and other fossil fuels reached new highs. The concern about the rising price

• << previous page
• 1
• 2
• 3
• next page >>

Add your voice

Know something about Impact of US presidential elections on capital markets?
We want to hear your view. Write now!