Impact of Political Cycles on Stock Returns

The majority of academic research over the past 40 years has examined the impact of the political cycle on price-earnings ratio to achieve a predictable pattern that investors can follow when available. Their findings are agreed and the patterns observed in countries around the world like Australia, New Zealand, and the United States have different political systems. Noorhaus (1975) A study by Booth and Booth (2003) found that the pattern of stock returns is consistent with the United States.

In this academic research we investigated the determinants of the 50 volatility returns and the conditional volatility of the KSE 100 index from August 1998 to December 2008 and the impact of macroeconomic fluctuations on stock volatility. Macroeconomic variables included in the analysis include market yield, industrial productivity, interbank call option rate, interest rate structure, money supply, exchange rate and inflation rate. To specify the relationship between the pre-economic factors and the price-earnings ratio, we use a reasonable evaluation formula (RVF) that sets the present value as a function of all expected dividends and discount rate expectations.

This applies not only to individual stocks but also to indicators used to evaluate stock market returns, inflation, bond returns, interest rates, and other financial products. No one knows what the short-term rates of return or interest rates will be. In the long run, the stock market inflation rate in the stock market is about 6 - 8%, and in the long run it is often 2 - 3%. Spikes are moving up and down, but these are long-term trends. Different kinds of assets will behave differently in different market environments. Over the years, US stocks are superior to international stocks, but in the next few years they are reversed. In one year, large companies are better than SMEs, but in other countries vice versa. If the asset class works well in a year, it will usually not be the best performer next year ... unless it is sometimes so! There is no way to predict which asset class "wins" in a short period of time.

A year ago, I sold all the investment in the stock market. Within a year, my return rate exceeded 15%, but this did not affect my decision to sell. The more I know about the stock market, I am afraid of me. Especially taking risk into account, it is very difficult for ordinary investors to conquer the market in a consistent manner (some people say it is impossible). The decision is beyond your control. The company can make decisions you do not agree. It could adversely affect their stock price and you can not do anything about it. If problems arise, you can expect to sell the loss or increase the price, but there really is no way to affect the result.