Many people say the stock market will definitely rise before the U.S. elections?
1 Common Misconceptions / Market Consensus
Many believe that before the U.S. presidential elections (especially in the second half of election years), the stock market "will definitely rise" or is highly likely to rise significantly.
Reasons commonly cited: the current government/president seeks re-election or party interests, and will use policies, fiscal stimulus, and Federal Reserve cooperation to "support the market" or "buy into" stocks.
It is commonly said that "the stock market must rise in election years" and "September to November is the strongest period."
2 Disproving with Historical Data
The stock market does not necessarily rise before elections; there have been many cases of significant declines or mediocre performance. In certain election years (such as 2000, on the eve of the 2008 financial crisis, and during the pandemic shock in 2020), there were significant pullbacks. Although the average returns are positive, the volatility is huge, and it is not a "hard and fast rule."
The rise and fall depend more on the current macroeconomic cycle, corporate profits, interest rate environment, geopolitical factors, etc., rather than a simple "election script."
3 The real driving factors
The performance of the stock market is mainly determined by economic fundamentals + liquidity + valuation levels. Elections are just background variables and will not override or reverse fundamental trends. If the economy is overheating and valuations are too high, there may be a decline even in an election year. Conversely, if it is at the bottom of a loosening cycle, it is easier to rise even without an election.
4 The essence of the financial script
The market often creates "certain narratives" (like "must rise in an election year") to attract retail investors to chase highs.
Once the narrative is falsified or the fundamentals reverse, a "highly destructive washout/correction" will occur. Blindly going all-in on "election-related trends" carries a high risk.
The logic of the US stock market is often compared to the crypto market (crypto is highly affected by US stock market risk appetite, Federal Reserve liquidity, US Treasury yields, and US tech stocks). After combining the performance patterns of crypto during the 2024-2026 election cycle, do not blindly believe that "crypto must surge before or during the election year."
BTC/crypto does tend to perform positively on average during election years (historically, bullish cycles often coincide with US easing + risk appetite), but it is not a hard and fast rule.
The major rise occurred only after the pandemic crash in 2020; if the macro environment turns (high valuation + interest rate hike expectations + liquidity tightening), even in an election year, there may be a significant decline followed by recovery.
2 Core observation indicator: the trend of US tech stocks (NASDAQ): the correlation between crypto and NASDAQ remains high. Federal Reserve liquidity signals: interest rate reduction cycle vs. pause/balance sheet reduction. Bitcoin dominance (BTC.D): if it remains high (>58-60%), it indicates that funds are still seeking refuge/investing in BTC rather than a full altcoin season.
Macroeconomic risks: Rapid rise in US Treasury yields, resurgence of inflation, geopolitical events.
3 Operation advice: be cautious about chasing highs: if the current position is already high and the market is filled with a single narrative like "election must rise" or "Trump/some party is good for crypto," beware of "script-style washouts."
It is safer to lay out in batches: increase positions only after confirming a fundamental turning point (e.g., the Fed clearly shifts to easing, BTC stabilizes at key support), rather than going all-in on "election themes."
Defense first: Set stop-loss levels and control positions (especially leverage), as election uncertainties + macro variables may lead to significant volatility.
Long-term perspective: The true driver of a major bull market is still the halving cycle + institutional adoption + global liquidity, while elections are merely catalysts/disruptors.
There is no script in the stock market/crypto market that guarantees a rise; there is only the real game of fundamentals and liquidity. Don't be hijacked by popular narratives; maintain independent judgment. A cautious attitude is not simply about being bearish; do not be trapped by a script that claims it will definitely rise. Return to fundamental analysis rather than betting on the political cycle.