Wednesday, December 25, 2013

Mid Term Election Year Market Return

Historically, the average S&P 500 Index return in post election years has equaled just over 5% as we noted in a post at the beginning of 2013. For certain this year has been anything but an average one with the S&P 500 Index up over 28% on a price only basis at the time of this writing. As 2013 comes to an end and investors begin to look at 2014, mid term election years tend to be more volatile during the first half of the year. Chart of the Day provides insight into mid term election years noting,
"Today's chart illustrates how the stock market has performed during the average mid-term election year. Since 1950, the first nine months of the average mid-term election year have tended to be subpar (see thick blue line). That subpar performance was then followed by a significant year-end rally. One theory to support this behavior is that investors abhor uncertainty. To that end, investors tend to pull back prior to an election when the outcome is unknown. Beginning in early October, however, the outcome of the election becomes increasingly apparent and investors respond by positioning their portfolios accordingly."
From The Blog of HORAN Capital Advisors

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