There are studies about the investments made by different Presidents but there is no study about how the year of the Presidential term plays a role in influencing the market trends. This innovative study was recently done by an investment, money management firm that was founded in 1979 by Ken Fisher. The firm referred to this study as the Presidential Term Anomaly. This study was presented as an Investments Infographic. An cool Infographic from an investment firm is a visual representation like a graph that helps understand complex information quickly and in an easy manner. The Fisher Infographic here talks about the apparent influence of the year of the Presidential term. When the market trend from the year 1926 to 2010 of the average returns was studied, it was clear that there were significant differences in the average returns for of the years. However the trend clearly shows that the second half of the Presidents term, that is the third and the fourth years are favourable for an investor as he gets higher returns on an average.
They have clearly reasoned out why this happens. Any President is more powerful in the first half of his term and hence all the new legislations are passed during this period. The new legislations result in the redistribution of money and property. Thus the chances of loss are higher. As the people, according to the Fisher research, hate loss more than they like gains, the returns are muted by the rise in the overall risk aversion when there is greater chance of passing of new legislations, resulting in the outcome : the returns are higher in the second half of a President’s term. This election analysis by Fisher is useful for the investors, as it keeps them informed about even the most non-apparent influences on market trends and hence helping them in making an informed investment.
