Stock investors should take this chance when presidential elections are nearing to buy stocks. Stocks can benefit well from political impacts.
The S&P rose by 91% during the third year of all presidential terms. There has not been a negative third year ever since world war 2 began in the year 1939.
Year 4 of the presidential terms was also positive.
The reason year three and four are positive is because of gridlock. All the big and scary legislation processes occur during the president’s first and second year. As a result, some people will benefit and suffer.
Also, there will be uncertainty which leads to volatility. During the first two years of a presidential term, the stocks are variable. The midterm elections quieten the Congress during the presidents third and fourth year.
The presidential election then dampens the fourth years’ legislation. Big and heavy legislation causes obstacles for people and businesses alike, and it’s quite scary. With gridlock, it creates motionless obstacles making the whole process a bit easier, and we become more optimistic.
While year three and four are good, their paths are different. During year three the stocks rise through the mid-summer and wiggle sideways as the campaign reaches its climax creating uncertainty.
Fourth years begins sideways with the uncertainty of elections, but clarity comes afterward. By summer the country has two known finalists, and then there is a winner. After we have gotten a winner uncertainty resumes back boosting back the remaining part of the fourth year.
People should own stocks and celebrate the legislations inactivity in 2019 as there will be lots of vagueness in 2020.