Sunday, 09 December 2018 23:20

The 18 percent solution Featured

Written by Sreeni Meka
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Historically the third year of the presidential term has always been good for the markets; even better if it is the first presidential term. Officially the campaign for the presidential election kick starts right after the midterm elections. With the hung congress, and positive economic momentum with reduced corporate taxes current administration has every incentive to kick-start the trade negotiations with our trade partners and start making market-friendly decisions.

Since 1950, the average third-year presidential term returned 16% market returns and 18% from the November of the election year to the middle of the third year of the presidential term. With GDP growth above three percent, we have more momentum to our economy may yield even higher returns.

If we consider only first term third presidential year the average S&P 500 returns were even sweeter, the average returns were 20.37% and median returns were 20 %. Since 1950, the third year returns in the first term presidential year were never a negative one but averaged 20% and the eight months return from November to mid third year was 19%.

In our opinion, given the state of our economy and the growth prospects and business-friendly policies and recent market correction, we believe the probability of getting good market returns are higher than usual.

Written on:November 7th, 2018

Read 2136 times Last modified on Sunday, 09 December 2018 23:35
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