Using their election prediction model based on the stock market, the Socionomic Institute gives President Trump a 87% chance of victory.
This is far higher than betting markets, who favor Biden, and in stark contrast to the 538 prediction model based mostly on polling, which gives Trump only a 12% chance at this time.
According to CBS News “the research, going back to George Washington, found 16 times in U.S. history when an incumbent president ran for reelection and the stock market was up more than 20% in the preceding three years. In 14 of those 16 times, the incumbent won reelection, giving a success rate of 87%. If the trend holds, Mr. Trump could be No. 15.”
The pattern has not always held.
As reported by CBS “The two times it didn’t work out, for reference, were George H.W. Bush, who lost to Bill Clinton in 1992 even though the stock market was up 38% in the preceding three years, and John Adams, who didn’t win his reelection bid in 1800, despite the fact that the value of capital in U.S. chartered banks had risen by 30% in the previous 5 years. (At the time, federally chartered banks were the only publicly traded stocks in the young republic.)”
Director of research Matthew Lampert explains “The stock market is an indicator of social mood. Historically, a more positive trend in the market and social mood is associated with a win for the incumbent.”