Veteran Wall Street strategist Gail M. Dudack is managing partner and director of research at Dudack Research Group.
KIPLINGER'S: The first two years of a presidential term are historically lackluster for stocks, with a bottom just before midterm elections, followed by a boom year. Will that be the case this time?
DUDACK: Like many cycles, the presidential cycle has an economic foundation. Spending programs flourish ahead of an election, but once in office, politicians do the tough stuff -- tax increases, spending cuts -- right away. But this year, you've got a president who's not going to be re-elected, so you might not see that pre-election spending. And you've got a Federal Reserve Board seeking stability. In any case, I believe wise investors should be aware of these historical patterns -- but suspicious at the same time.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
| Row 0 - Cell 0 | Investment Guide to the Elections |
| Row 1 - Cell 0 | What If the Democrats Win? |
| Row 2 - Cell 0 | Latest Stock Coverage |
Suspicious, why? If making money from the four-year cycle were that simple, we'd all be millionaires. I think that misconception kept many people negative on 2006, wrongly. We got a great buying opportunity in June that had nothing to do with cycles.
What about 2007? The average gain in the SP 500 in pre-election years dating back to 1888 has been 11%. I'm bullish too, but for other reasons. In this economic cycle, companies in the SP 500 index have had 17 consecutive quarters of double-digit earnings growth. Cash flow is terrific. Corporate balance sheets are so healthy now. The question is, as consumers pull back, will companies spend enough to drive economic growth? I say yes.
What can investors glean from historical patterns? It's difficult to use this information strategically. If you're a long-term investor with a balanced portfolio, you should ride out cycles anyway. If stocks tumble in a midterm election year, just tell yourself it's only the four-year cycle.
-
CMS Brings Back Furloughed Staff for Open Enrollment LifelineThe government has recalled approximately 3,000 workers to assist with Medicare and ACA Marketplace Open Enrollment.
-
Social Security Wage Base Rises Again for 2026: Who Pays More Tax?Payroll Taxes The Social Security Administration has announced significant changes affecting millions as we approach a new year.
-
What the Rich Know About Investing That You Don'tPeople like Warren Buffet become people like Warren Buffet by following basic rules and being disciplined. Here's how to accumulate real wealth.
-
How to Invest for Rising Data Integrity RiskAmid a broad assault on venerable institutions, President Trump has targeted agencies responsible for data critical to markets. How should investors respond?
-
What Tariffs Mean for Your Sector ExposureNew, higher and changing tariffs will ripple through the economy and into share prices for many quarters to come.
-
How to Invest for Fall Rate Cuts by the FedThe probability the Fed cuts interest rates by 25 basis points in October is now greater than 90%.
-
Are Buffett and Berkshire About to Bail on Kraft Heinz Stock?Warren Buffett and Berkshire Hathaway own a lot of Kraft Heinz stock, so what happens when they decide to sell KHC?
-
How the Stock Market Performed in the First 6 Months of Trump's Second TermSix months after President Donald Trump's inauguration, take a look at how the stock market has performed.
-
Fed Leaves Rates Unchanged: What the Experts Are SayingFederal Reserve As widely expected, the Federal Open Market Committee took a 'wait-and-see' approach toward borrowing costs.
-
Fed Sees Fewer Rate Cuts in 2025: What the Experts Are Saying
Federal Reserve The Federal Reserve cut interest rates as expected, but the future path of borrowing costs became more opaque.
