The good news: The S&P 500 averages a 1.28% monthly gain once the election is over.
Blink and you might have missed the fact that voters, at least a few of them, went to the polls this past Tuesday to cast their ballots. This wasn’t the year of a presidential election, or even a midterm, when control of the House and Senate are at stake. Instead, outside of a few states, the vote was for city council seats, judgeships, and other low-stakes positions and propositions.
Yet all these results are just a sideshow compared to the looming main event in one year’s time. It’s widely expected to be a face-off between current President Joe Biden and former President Donald Trump, two candidates no one seems all that excited about. According to an NBC News survey of 1,000 registered voters conducted in September and cited by Deutsche Bank, respondents were very worried about Biden’s age and Trump’s legal woes. Don’t expect that to change anything, though.
We can even pinpoint when the odds are particularly stacked against investors. Raymond James strategist Ed Mills notes that from January to the run-up to the Super Tuesday primaries in March, the S&P 500 averaged a loss of 0.44%, while it averaged a monthly loss of 1.27% in the month heading into Election Day. The good news: The S&P 500 averages a 1.28% monthly gain once the election is over. “ quickly play catch-up after election year uncertainty is resolved,” Mills writes.
Nor are the returns a response to anything fundamental. The U.S. economy has grown at a 3.5% clip during presidential election years versus 2.7% in other years since 1984, while S&P 500 earnings per share have grown by 9%, 1.5 percentage points more than in other years. “Election-year equity returns are typically driven entirely by profit growth,” Kostin explains.
Election City Council Judgeships Low-Stakes Positions Propositions
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