This article is written by MarketWatch columnist Mark Hulbert.

A model that uses stock market performance in election years to predict the re-election probability of the ruling party shows that Harris' chances of winning the presidential election have decreased compared to two weeks ago.

Nevertheless, the model still predicts that as the Democratic presidential candidate, Harris is likely to win the U.S. election on November 5th - with an expected success rate of 69%, lower than the 72% shown by the model on October 17, due to the Dow Jones Industrial Average dropping 0.90% since then.

This stock market-based forecasting model is not complicated. It utilizes the historical correlation between the re-election probability of the ruling party and the performance of the Dow within the year. The model's historical record is statistically significant, reaching a significant level of 99%.

Refer to the chart above. It plots the trendlines that best fit historical data since 1900. Is this model foolproof? Of course not. Also, remember that a 69% probability is not 100%. Furthermore, even if the model's past performance has been flawless, it does not guarantee that the future will be the same as the past.

Having said that, this simple model does indeed have a better historical record than most models used on Wall Street, many of which lack statistical validity. Theoretically, this model makes sense: the stock market is forward-looking, so a rising market indicates that most investors are optimistic about the economic outlook in the coming months. Multiple studies have found that people tend to vote based on their own economic situations.

Many people believe that Harris becoming president would have a disastrous impact on the economy. If those pessimistic predictions are correct, we would expect the stock market to crash whenever the likelihood of Harris winning the election increases. However, that is not the case. Since July, during the weeks when the price of Harris winning contract on PredictIt.org has risen, the stock market has, on average, been increasing.

During the same period, when Trump's winning contract price on PredictIt.org has been rising, the stock market has, on average, been declining. This aligns with recent predictions from Trump's ally Musk, that if Trump wins the election, the stock market will collapse.

No prediction model is foolproof, and this model based on the Dow Jones annual return rate is no exception. However, its historical track record is good enough to warrant our attention.