US-Election year (2016)
In presidential election years, the S&P 500 has posted an average return of 6.5% versus 7.9% in all years. Excluding 2008, presidential election years going back to 1960 have seen an average return of 9.1% versus 8.8% for all years.
Sam Stovall, U.S. equity strategist at S&P Capital IQ, takes the data back further but finds similar results. Going back to 1948, the fourth year of the presidential election cycle has seen the S&P 500, excluding dividends, gain an average of 6.1% versus a rise of 8.8% in all years. The S&P has tended to gain in 76% of presidential election years, versus 71% of all years since 1948 (see table above).
Stovall, in a Dec. 7 (2015) note, also highlighted small-cap performance in presidential election years. Small caps gained ground 78% of the time in the fourth year of a presidential election cycle versus 71% for all years going back to 1979, he said. Presidential election years have seen small caps rise 10.9% on average, without dividends, versus 11.2% for all years.
Brian Belski, chief investment strategist at BMO Capital Markets, took the data back to 1928. Presidential election years have produced an average S&P 500 annual gain of 7% versus 7.5% for all years, he found. In other words, presidential election years have been pretty average.
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