Quote:
Originally Posted by dewilson58
Please provide supporting data since you are presenting this as fact. 
Here are some facts:
In 2016, Charles Schwab analyzed market data going back to 1950 and found that, in general, the third year of the presidency overlapped with the strongest market gains. The S&P 500, a fairly broad index of stocks, exhibited the following average returns in each year of the presidential cycle:
Year after the election: +6.5%
Second-year: +7.0%
Third-year: +16.4%
Fourth-year: +6.6%
Overall, the predictive power of the presidential election cycle theory has been mixed. While average market returns in years one and two have been slightly sluggish overall, the direction of stock prices hasn’t been consistent from one cycle to the next. The bullish trend in year three has proven more reliable, with average gains far exceeding those of other years. What’s more, roughly 90% of all cycles since 1950 experienced a market gain in the year after the midterm elections. |
OK, I put that 3rd-year factual statistics into my slow, small, mind-computer. And I came up with an explanation that satisfied myself. It actually parallels my statements about both BIG and small investors preferring government STABILITY. The more the better for the market. BIG investors have a conservative bent. They want their money to make them more money, BUT at the lowest possible risk. The 3rd year of ANY Presidents term is the year AFTER the midterms. So, what usually (not always) happens is that the party that is opposite to the President takes over that year. This makes the 3 rd year usually (?) the most stable. Things can get done, but RADICAL changes are less likely to happen with a President of one persuasion and a Congress of the other persuasion. So stability makes the stock market go up in that 3rd-year situation. I can buy that!