Presidential Election & the Stock Market

Stocks found additional momentum as the new presidential race geared up. 2003 was the third year of the four-year presidential cycle, which historically has been the strongest for the S&P 500. And, it was. In 2003, the Stock Market post a strong gain.

In fact, for over 50 years, the equity markets have unfailingly delivered positive total returns in the year before a presidential election, ranging from a high of 32 percent and a low of 5 percent.

Of course, since every year is different, the calendar can never be a reliable market-timing tool. But it does mean that, as scandals ebb and the seasonals improve, the stock market could at last have the wind at its back.

September Phenomenon

September is usually a bad month...

Although September historically has been the worst month, October has witnessed the beginning of more new bull markets than any other month in the past 80 years.

Since 1926, 11 major market bottoms have occurred in the month of October.

The seasonal story gets even stronger. The market typically has gone on to post its highest returns in the six months from October to March. The S&P 500 has gone up by 8 percent during that half of the year, on average, which has been nearly three times the average return posted between April and September.