Author: Ruan Yingxian

2020 is the year of the Presidential Election of the United States.In early 2020, the US economy was strong and the unemployment rate was low. The Dow Jones Industrial Index reached a record high in February.Just as Trump thought he was re -election, the new crown pneumonia broke out in the United States in March, killing Trump by surprise.Due to the rapid spread of the virus, the United States failed to respond to the epidemic, failed to connect other countries to resist the other countries, and then the Black Lives Matter's police -civilian conflict and racial conflict broke out.At present, various public opinion surveys have shown that Bayon's people's hope is far ahead, and Trump is difficult to recover.

Democratic Party is elected as high in stock market

There are many research on politics and economists on the presidential election of the United States.Some people find an interesting phenomenon that when the president is Democratic, the stock market returns are generally higher than the Republican president.How high?From 1927 to 2015, when the president was Democratic, the stock market returns were 10.7%higher than the fixed return of US Treasury bonds each year.Not only that, from 1930 to 2015, when the president is a Democratic party, the US economic growth average of 4.9%year -on -year; but when the president is a Republican, economic growth is only 1.7%.

This phenomenon has actually been discovered in the 1980s, but it is strange that if American voters find that Democrats are more suitable for presidents and the Republican Party has a poor economic depression stock market, the Republican Party should have been spurred by voters.In fact, political parties have been happening, and both Bush and Trump are Republicans.

Even if the public is ignorant, investors should be smarter. If the election result is the election of the Democratic presidential candidate, it should immediately buy the stock, and the Republican party will be sold.But the facts are just the opposite. Generally speaking, the Republican Party wins, and the stock market is usually more opportunities to rise the next day; the Democratic Party wins, and the stock market will usually fall the next day.

In addition, if there are some predictable trends in the stock market, those investors who have the opportunity of the candle can be made first to buy and sell stocks in advance to obtain profits.But as more and more people know these stock markets, these predictable trends will disappear, and the market tends to be effective.In fact, this Democratic party premium phenomenon has always occurred.For example, during the President of Democratic Party Clinton from 1993 to 2001, the Dow rose from about 3200 points to about 10,600 points.Republican President Xiaopshi took over from 2001 to 2009, and the Dow fell from about 10 or 600 points to about 8,300 points.Democratic Obama took over in 2009 to 2017, and the Dow returned to about 20,000 points.

Because this phenomenon is really interesting, some people call it a Presidential Puzzle.

Democratic party election is related to risk aversion

Recently, two financial scholars at the University of Chicago gave an explanation.They believe that voters' voting behaviors and asset allocation are related to their risk aversion emotions.What is risk aversion emotions?For example, that day, the peace is peaceful, the people's livelihood is rich, and the aversion of the average person is low, and it can withstand greater risks.The risk aversion will rise high.

So what is the relationship between risk aversion and voters' voting intentions?This is related to the concept of the Democratic Republican Party.Democrats tend to be a large government, support taxes to rich people and enterprises, and re -assign wealth to the hands of the poor and disadvantaged communities.The Republican Party tends to market leadership, reduce the government's intervention in the market, and support tax cuts.For example, in the 1980s, Trump, which promoted the small government and the leakage effect, and Trump, who reduced corporate taxes during his tenure, belonged to the Republican Party. Obama, which promoted medical reforms and increased the poor medical benefits of the poor.

It is conceivable that the election of the people's risk aversion is high. Of course, I hope to be guaranteed by the government, neutralize the risks such as the loss of my unemployment, and tend to support the Democratic Party. When the risk aversion is low, voters can be self -reliant, and they do not want to work hard to work hard.The results were taken away by the government's taxation and supported the Republican Party.For example, in the 2008 election, it was the financial tsunami and social panic, and the Democratic Party Obama was selected; this epidemic also greatly increased the victory of Biden.Two elections in 2000 and 2016, American society is relatively Antai, which happens to be the Republican victory.

High -rise in risk aversion, high expectations of high expectations

The risk aversion is closely related to the return of the stock market.The return of the stock is fluctuating, and the risk of determining the money for bank interest is small.Therefore, assets with high investment risks require higher expectations to compensate the risks, which is called a risk premium.When the risk aversion is high, investors need to get more compensation before they are willing to invest in high -risk assets (such as stocks), so the stock market expects high returns.Therefore, the high expectations of voting Democratic Party and stocks are both reflected in the high risk aversion of voters.

This theory also explains why Republican candidates are elected, and the stock market will rise immediately.Because the situation of the U.S. presidential election has always been fierce, which party will win, often five or five waves, it is not until the moment the invoicing knows who the deer died.Because tax cuts are beneficial to the stock price, the moment of opening the ticket, if the Republican party wins, the chance of tax cuts will increase greatly, and the stock price will naturally rise.

Of course, according to the current election, many models are inferred that the Democratic Party has a high chance of winning this time. It is as stable as Taishan, and even pointed out that even Trump himself has made up the number.Enter the face.By the results of the election results, the Democratic Party would really win, and the stock may not have a change.

In the end, wearing a helmet, the wave system is full, politics is too many a day, and the above does not constitute investment proposals. At that time, everyone was not optimistic about Trump, but he won, so he was unveiled in November.

The author is a assistant lecturer at the School of Economics and Industry Administration of Hong Kong University