It is reasonable to suppose that the stock market may be influenced by the electorate, and that stock prices may reflect consensus expectations of the success or failure of government economic policies or merely the consensus perception of political rhetoric. Stock market data, in this case, should give evidence of cycles, not only of the proper frequency, but also of the proper phase. That is, to qualify as political in nature, the cycles would have to reach their maximum on or near the November election dates.

An analysis of month-end stock market prices from January 1926 through December 1977 reveals the existence of both two and four-year cycles. While the four-year cycles peak in the November of presidential election years, the two-year cycles reach their maximum, on average, in the ninth month following the election. The evidence thus offers strong support for a four-year political-economic cycle, but no support for a two-year stock market cycle that is politically induced.