Особенности использования цикла президентских выборов для прогнозирования преобладающей тенденции на фондовом рынке США

Abstract

Purpose: to establish the features of manifestation of the socio-economic cyclical pattern "The cycle of presidential elections" in the US stock market in modern conditions and to develop recommendations for the practical application of this pattern in the investment activities. Design/Method/Approach of the research: The research was carried out by statistical processing of data on the values of the Dow Jones Industrial Average for the period from 1887 to 2020. Findings: the research has shown that the regularities in terms of the average increase of the Dow Jones index in different years of the Presidential election cycle in the modern economy are differ from the ones that existed before 1993. At present, only one year can have the practical interest - the year before the US presidential elections, when the average growth of the index is 2-4 times higher than the growth in other years of the cycle. The previously known thesis that the US stock market grows faster under the ruling Democratic Party is also confirmed in the modern economy. Nevertheless, every year the difference between market gains for different years is smoothed out. Within the "Presidential Election Cycle", there is a consistent pattern that the Dow Jones Index grows from its minimum value in the "interim" year to the maximum value of the next, pre-election year. At the same time, in recent decades, the value of the percentage increase has a tendency to decrease, and if earlier, from 1914 to 2011 its average value was 47-48.6%, then in the period from 1993 to 2020 the percentage of growth decreased to 36.7%. Practical implications. The practical application of the research results will make it possible to improve the accuracy of forecasting the prevailing trends in the international stock markets and, accordingly, to increase the efficiency of investments. Originality/Value: This research expands knowledge about the peculiarities of manifestation and use of the cyclical pattern of the "Presidential Election Cycle", offers an updated model of its use in predicting the prevailing trend in the US stock market. The results of the study may be of interest to specialists working in the field of investment in international financial markets. Research limitations/Future Research: The research results provide a basis for conducting similar research for European and Asian financial markets, as well as identifying and researching other cyclical patterns in international financial markets in order to develop applied investment mechanisms that increase the efficiency of investment. Paper type: empirical.