Salient to Investors:

Jeffrey Hirsch at Stock Trader’s Almanac writes: 
  • Presidential elections have a profound impact on the economy and the stock market.
  • The last two years of the 44 administrations since 1833 produced a total net market gain of 724 percent versus the 273.1 percent gain of the first two years.
  • Presidents tend to take care of most of their more painful initiatives in the first half of their term and prime the pump in the second half.
  • Victorious candidates rarely succeed in fulfilling campaign promises of peace and prosperity. In the past 25 post-election years, three major wars began and four drastic bear markets started. 
  • After the midterm congressional election and invariable seat loss by his party, the president during the next two years jiggles fiscal policies to get federal spending, disposable income, and social security benefits up and interest rates and inflation down. Practically all bear markets began and ended in the two years after presidential elections. Bottoms often occurred in an air of crisis but crisis often creates opportunity in the stock market. In the last 13 quadrennial cycles since 1961, 9 of the 16 bear markets bottomed in the midterm year.
  • There has not been a down year for the Dow in the third year of a presidential term since 1939. The only severe loss in a pre-presidential election year going back 100 years occurred in 1931 during the Depression.
  • Since 1948, investors have barely been bruised during election years, except for a brief span early in the year—until the 2000 and 2008 bubble bursts.

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