Going back to 1950 the 3rd year of a presidential cycle had a median gain of 15%. (I immediately thought of 1987)
Still, that's pretty hefty gains.
Thanks joj!
https://bullmarkets.co/3rd-year-presidential-cycle-bullish-stocks/
Here’s what the stock market does next after midterm elections.
Here’s what the U.S. stock market does in the average 3rd year of the presidential cycle. As you can see, the stock market typically SOARS.
By Mark Hulbert
Published: Oct 2, 2018 8:26 a.m. ET
The worry stems from researchers’ theory for why presidential third years historically have been so good for the stock market: There’s reason to doubt that it applies to today’s market.
The theory was proposed recently in an academic paper written by Kam Fong Chan, a senior lecturer in finance at the University of Queensland in Australia, and Terry Marsh, an emeritus finance professor at the University of California, Berkeley, and CEO of Quantal International, a risk-management firm for institutional investors.
Their theory is that third years are good ones for the stock market because that’s when it bounces back from what often is a mediocre second year. The reason second years are disappointing is the above-average economic-policy uncertainty that typically prevails at such times — uncertainty that gets resolved by the time the third year rolls around. Chan and Marsh find strong support for their theory in the Economic Policy Uncertainty (EPU) Index that was created several years ago by three finance professors: Scott Baker of Northwestern University, Nick Bloom of Stanford University and Steven Davis of the University of Chicago.
The reason to question this theory’s applicability to the current stock-market situation is that the EPU Index has been well below average for several months now (see chart at top of story). This is precisely the period in which, historically, uncertainty has been well above average. To that extent, therefore, there’s no reason to expect the market to bounce back in coming months.
To be sure, it’s hard to fathom how the EPU Index can be below-average, given what at least appears to be an extraordinary amount of uncertainty coming out of Washington — everything from a brewing trade war to the possible shift in Congressional power coming out of the mid-term elections. But Marsh, in an interview, said that there’s a distinct possibility that the current high level of political uncertainty isn’t translating into an equally high level of economic uncertainty. And it’s the latter kind of uncertainty that affects the stock market.
Additional evidence for this possibility comes from the CBOE Volatility Index’s VIX, +3.20% low levels in recent months. Its average level in the third quarter, for example, was below 13. That’s low; the VIX’s average level since the bull market began in March 2009 has been close to 18.
The bottom line? You may want to think twice before automatically assuming that the stock market will perform well over the coming year just because it’s the third year of President Trump’s term.
"How the market shakes out in the final two years of Trump’s presidency will probably be influenced by Tuesday’s elections. Analysts expect pressure on stocks if Democrats gain control of the House of Representatives and a sharper downward reaction if they sweep the House and Senate.
On the contrary, if Republicans hold their ground, stocks could gain further, with hopes of more tax reform ahead.
The following graphics show how the Trump presidency has played out on a macro and micro level":
Thanks Mike.
Good stuff.