With the first primary debate of the 2016 election season kicking off tonight, Benzinga took a look at historical stock market trends relating to U.S. presidential election cycles. The election of the leader of the world’s largest economy has huge implications on global markets, and the process of selecting that leader has historically been a major market-mover.

Presidential Election Cycle Theory

The person credited with the idea that the U.S. presidential election could be a tradable event is Yale Hirsch. According to Hirsch’s theory, U.S. markets historically perform better during the second half of a president’s four-year term than during the first half.

In fact, the S&P 500 returned an average annual return of 16.05 percent during the second half of presidential terms from 1948 to 2008. The first half of a presidential term produced annual returns of only 8.8 percent during the same period.

Testing The Theory

A 2012 Pepperdine study by Marshall Nickles and Nelson Granados demonstrates…

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