Photo: LPL Financial
Here is a chart we’ve seen before. It’s Obama’s re-election odds against the S&P 500. The two have been greatly correlated and continue to be so as the election nears.Stock market historian Sam Stovall has even stated that stocks predict who will be president with 88% accuracy.
LPL Financial’s Jeff Kleintopl, who built the chart, posed an interesting question. “Is the stock market going up because of the rise in Obama’s re-election odds, or are Obama’s re-election odds going up because the stock market is rising — or, more likely, are both tied to something else?”
While there are many “man on the street” polls, what matters most to investors is what is priced in on Wall Street rather than what people are saying on Main Street. A stock market based “election poll” is useful in that it highlights what the market is pricing in about the outcome of the election that is more refined than merely looking at the overall market.