Sell for Obama, Buy for McCain

Forget the polls. The stock market will tell us who will win the election in November.

It turns out that the price performance of the S&P 500 has an impressive track record of predicting presidential elections, according to Standard & Poor's chief investment strategist Sam Stovall.

Stovall found that the index's performance during the three-month period before presidential elections had 79 percent accuracy rate in predicting the re-election of the party in power. And 83 percent of the time it was right in predicting a change in power.

A rising market during the 90-period would indicate a re-election of the same party, while a decline would foreshadow a change in office. In 11 of 14 elections where the incumbent party was reelected, the S&P 500 rose prior to November. And in 5 out of 6 elections where a new party came into office, a declining market correctly foretold the election results.

Here are the results from the 20 elections since 1928:

So if the market continues its decline for the three months beginning today, look for Barack Obama to win in November. If it rises, there's a good chance John McCain will declare victory. Several hours into the first trading day of the first month of the period, Obama's ahead.

Now, we hope Obama supporters won't dump their portfolios in light of this little nugget of information, as the past is no guarantee for future results.

But maybe there's something more to those new short-selling restrictions after all? Hmm...

by Megan Barnett