Equity investors could profit from keeping an eye on the presidential cycle, says John Ficenec in The Daily Telegraph. The basic idea is that administrations stimulate the economy in the third year of a term so that, by the time the next election comes up, the feel-good factor is spreading. In the first two years of a government, the previous stimulus is reined in.
So while the first two years of a presidential term are typically lacklustre for equities, the third is fantastic. Since 1932 the third year has returned an average of 26%. The average performance in year four [...]
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