Friday, March 15, 2024
Ryan Detrick, the chief market strategist at Carson Wealth Partners, is one of my favorite stock market observers. Ryan has been bullish on the stock market since late 2022, which has turned out to be a great market timing call. My colleagues and I, at Riverfront Capital Strategies, have been decidedly more cautious over the last two years. The economy and the stock market are complex systems, and differences of opinion among analysts are to be expected. Ryan relies quite a bit on market history in his analysis. Since a “big story” in 2024 is the presidential election in November, he recently published a piece on the market’s historical performance during presidential election years. One might expect the market to move sideways in election years as the promise-making and mudslinging of politics takes center stage. Somewhat surprisingly, history tells us to expect decent stock market returns, in spite of all the uncertainty that accompanies presidential elections. Since 1950, the stock market (S&P 500 Index) has gone up 83% of the time in presidential election years, and the average annual return is 7.3%. The 2024 stock market is currently ahead by just over 7%. So, by this rule of thumb, there is not much upside. On the other hand, the market has historically fared better in the second half of presidential election years. As a stalwart bull, Ryan is sticking with his optimistic outlook for 2024, even after the strong start. Another historical plus for 2024 is that stocks have done much better in election years when one of the candidates is running for re-election, as opposed to an election year with a lame duck president. Presidential election years with reelection candidates saw an average stock market return of 12.2%, whereas election years with lame duck presidents saw a slightly negative average return. A final stat from the history file: if the pre-election year is up 20% or more (as was the case in 2023), the presidential election year has been higher 100% of the time (seven times) since 1950. So, history makes a strong case for a bullish stock market outlook for the coming months. Many of our clients are less optimistic. Living in the real world of our stridently politically divided country and nagging inflation (my barber recently raised the price of a haircut to $17, a 20% increase!), it might be tempting to dismiss the history lesson and say, “This time is different.” While it may be true that we’ve never seen anything like the upcoming rematch of Biden versus Trump, experience-based wisdom tells us to be careful about using the “This time is different” way of thinking. Ryan’s examples from history encourage us to stay on course. At Riverfront, our position has been and continues to be to stick with your gameplan and asset allocation with a tilt toward defense. Don’t abandon the stock market, and don’t forget to vote.
Bruce Robinson
Source: Blog post article: 16 Charts (and Tables) to Know This Election Year by Ryan Detrick, the chief market strategist at Carson Wealth Partners. Dated: March 6, 2024
This material is for general informaƟon only and is not intended to provide specific advice or recommendaƟons for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. InvesƟng involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged staƟsƟcal composites and cannot be invested into directly. Index performance is not indicaƟve of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. All informaƟon is believed to be from reliable sources; however, we make no representaƟon as to its completeness or accuracy.
Comentarios