Abstract
During the six presidential administrations between 1989 and 2012, individual investors allocated more of their investment portfolios to stocks when a Democrat presided than when a Republican was in office. They also allocated more of their portfolios to stocks during the last two years of a president’s term in office than during the first two years. These findings are consistent with previous studies suggesting that stock returns are higher during a Democratic President’s term in office than during a Republican administration. In addition, they support the idea that investors acknowledge the existence of a four-year presidential election cycle and try to profit from it.
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