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To predict 2012 winner, look to your portfolio

To predict 2012 winner, look to your portfolio

Pundits and polls don't often a clear answer on who might win the White House in 2012, but some investment researchers say anxious voters should look no further than their own stock portfolios to predict the winner.  InvestTech Research in Montana says the stock market has been the most reliable predictor of presidential victors for more than 100 years.

"The election is a reaction to the stock market. If you see strength in the market, consumer sentiment and confidence among the voters is higher. If you see volatility, you are going to see investors take that out on the incumbent," Eric Vermulm, an InvestTech Research senior portfolio manager, told U.S. News.

The math is simple. If the stock market gains in the two months leading up to the presidential election, the incumbent party wins. If the market falls, the incumbent party loses.

Since 1900, the stock market has correctly forecast nearly 90 percent of presidential elections. In the 28 elections tracked, there have been only three exceptions: 1956, 1968, and 2004.

In the 16 elections when the stock market climbed before Election Day, the incumbent party was re-elected 15 of 16 times. And, in the 12 election years when the stock market suffered losses, the incumbent party lost 10 of 12 elections.

Today, the DOW approaches 13,000 points which might bode well for Obama's reelection campaign, but we're still nine months out from the general election -- an eternity in presidential politics.

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