Does the Stock Market Determine the Presidential Election? [AUDIO]
One study found that where the Dow goes, up or down between Labor Day and Election Day, historically, can determine whether voters keep the incumbent President or vote in his challenger.
Researcher James Stack found this measure of the Dow has accurately predicted the winner in 25 out of 28 presidential elections since 1900, a 90 percent accuracy rate. Stack is President of InvesTech Research.
Stack's logic says a rising stock market normally reflects investors' belief that the economic outlook is brightening. And an improving economy often coincides with rising confidence among investors and voters, which boosts the odds of the incumbent winning.
Fairleigh Dickinson University Political Scientist Peter Wooley doesn't necessarily buy into Stack's theory. But, he says that even if the economy is looking good through the eyes of the stock market right now, it could change relatively quickly.
Wooley says most voters look at the facts in an election, draw ther conclusions, and then make a choice based on what they conclude.