Statistical Model Provides Hints at Presidential Outcome

Most people might look at the stock market and purely view it through a financial lens. The performance of the Dow Jones index might lead to a better performing portfolio or perhaps losses, but to some political and financial observers, it can tell a lot more than that.

Paul Schatz developes a statistics- and mathematics-based model that looks at market trends and what they say about which party will win control of the White House.

"If we sell off dramatically from now until election day, it gives a big tailwind to Donald Trump and if we rally from now until the election, it gives a big, big bump to Hillary Clinton," Schatz said during an interview at his Woodbridge office Wednesday.

Schatz, who is the president of Heritage Capital, said the key figure is 18,000 and whether it soars above or below that threshold.

"The farther below 18,000 the market goes into election day, the more likely it is that Donald Trump is going to win," Schatz said.

The model has correctly corresponded in every presidential election since he built it in the 1980s with the exception of the 2004 presidential contest between President George W. Bush and Senator John Kerry.

As for market certainty and the stability of the indexes, Schatz said brokers, investors and the markets like divided government more than one party rule.

In that case, Schatz said, "The only legislation that gets passed are what are true bipartisan compromises that are very moderate and middle of the road," which don’t disrupt the status quo.

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