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"The Presidential Election cycle is one Wall Street truism that has historically proven to have merit for investors," explains money manager, advisor and market historian Jim Stack.
In his InvesTech Market Analyst, the advisor reviews the basics of this cycle, its historical merit, and what the Presidential cycle portends for the market's action between now and Election Day.
"Since we are in the midst of an election year, this cycle warrants review. During the 4-year Presidential Election cycle there is a characteristic variation in annual stock market returns that is evident in historical data and actually makes sense when one thinks about it.
"Basically, it boils down to just 'good politics.' Politicians worth their salt understand the goal: get any
bad economic news over early during your term and have the economy back on track and humming along
by Election Day.
"Consequently, the worst stock market performance typically occurs in the first two years after a Presidential Election. The third year, as politicians begin gearing up for re-election, is usually the
best year on Wall Street by a wide margin, and the only year where the average gain in the S&P 500 tops
10%.
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