Election Fever (Part 2)

Last week we wrote about the shorter-term historical precedent with market performance, specifically the two months leading up to and the two months following the last four election dates.  Now let’s widen the scope to a galactically greater degree: in years rather than days and starting way back with Andrew Jackson’s presidential term (yes, the 1830’s).

We’ve been long-term followers of Jeffrey and Yale Hirsch’s “Stock Trader’s Almanac” which has been published annually in November for the last six decades.  The almanac is full of historical market data observations that can be helpful in providing strategy ideas and unique perspectives on potentially repeatable market patterns.  According to the Hirschs’ research on the last 46 administrations since 1833, the second half of the election term produced a total net market gain of 742.5% versus the 326.6% gain of the first two years of these administrations (NOTE: the charts below do not include Trump’s Pre-Election and Election years, 2019 and 2020):

Wall Street Journal’s Paul Vigna on Friday took it a step further by looking at the S&P 500 since 1929, providing stats on which party produces greater returns.  His primary takeaway?  “Stocks tend to go up regardless of which party controls Washington”.  From single-party control of both Congress and the presidency to a split government, S&P 500 performance has been, on average, very similar (7.45% and 7.26% respectively).

The bottom line: we continue to rely on our optimized models and rules-based logic rather than emotion and political bias.  As you can see from the data, the build-up and outcome of the upcoming election in retrospect will likely lend itself more to theatrics (and timing and cycles) rather than elephants and donkeys.  The above charts and the YTD 2020 market performance, again remind us that anything is possible in any given year with the market.

Forte Strategy Update

We executed 7 trades last week for a net loss of 2.1% compared to a loss of 0.5% by the S&P 500. Our YTD net results equal a 1.4% gain compared to a 7.2% YTD gain for the S&P 500. Our YTD max drawdown is 9.5% versus 33.9% for the general market.   The account correlation to the SP500 remains low at 0.154.

More details about our trading activity can be found by registering on the Collective2 website and searching for Forte Strategy. A running list of these email blogs and general information about Maestro Capital Research can be found at maestrocapitalresearch.com.

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