Hi Guys,
I am a political party agnostic. In my first presidential election (1956), I voted for Ike Eisenhower; in my second election (1960), I opted for John F. Kennedy. My primary criteria is perceived leadership qualities, not party affiliation.
But I'm not market race agnostic. Since I've been retired for almost two decades, I consistently root for positive annual returns in excess of inflation. Elections have the potential to disrupt market returns. Does next week's mid-term races possess that power? Your opinions are welcomed.
To ground those opinions, I've added some sources to guide my thoughts on the matter. Perhaps they'll help you. Mostly, my research products come from S&P's Sam Stovall and from Nate Silver, who specializes in political and sports predictions.
In general, mid-term elections pump monthly market returns significantly upward relative to "all year" returns. Here is a link that summarizes Stovall's monthly data since 1945:
http://blogs.marketwatch.com/thetell/2014/03/31/midterm-elections-could-contribute-to-june-swoon-sps-stovall/Here is a viewgraph presentation assembled by Stovall that provides more context and longer timeframe analyses:
http://www.nacubo.org/Documents/EventsandPrograms/2014/2014EDMF/IsItTimeToBuyOrBail.pdfThis presentation includes loads of data including Russell 2000 data that further demonstrates the positive aspects of the 4th quarter in the second year of the presidential cycle. Great stuff. See for example the sector returns viewgraph.
But there are flies in the ointment. Stovall's research finds that the markets do best when a single party totally controls all three major federal government institutions. That's contrary to much of Wall Street's supposed wisdom. Market returns degrade by more than a factor of two when both the Senate and the House are hostile to the President. Gridlock erodes market rewards. Please see this WSJ summary article:
http://blogs.marketwatch.com/thetell/2011/07/29/Washington-grumbles-wall-.street-stumbles/From the referenced piece: "or, as Stovall concludes, "Washington grumbles, Wall Street stumbles"."
Presently, Nate Silver is forecasting a 68% likelihood that the Republicans will control the Senate come next Tuesday. Here is a link to his prediction:
http://fivethirtyeight.com/interactives/senate-forecast/Nate Silver is a very serious statistical forecaster. His current estimate includes 1588 survey sources. His analysis incorporates sophisticated hard and soft weighting functions that are empirically based. Silver cobbles this data together using random Monte Carlo simulations. His record (the acid test) is far more right than wrong.
How do you think the market will react to a likely Republican victory or an underdog win by the Democrats?
Best Regards.
Comments
Well if you believe Hulbert's analysis the 3rd year of the presidential cycle is much better than the others, and although he doesn't go into the details of who controls Congress and/or the Presidency, it seems the basic expectation based on history should be a pretty decent year.
In terms of the specifics we're now experiencing, I don't think the market will be impacted much by the election. If the Republicans win they won't have enough of a majority to override Obama's veto and if the Democrats keep the Senate we already know its not that difficult for either chamber to stop things from getting done. Unfortunately with Obama in his final two years and with such low approval ratings, I'm not sure he's going to be willing to work with Congress to achieve anything, especially if the Republicans control Congress.
Where that leads us is a whole new topic.
I now rotate my vote between the two groups. This election for this bunch and the next election will be for the other bunch.
This has become more difficult in the last several election cycles at local and state levels as there are always more party affiliations involved. Coin tossing has become the chosen method with this.
http://www.zerohedge.com/news/2014-10-30/hillary-clinton-businesses-dont-create-jobs-–-why-shes-never-been-more-wrong
TOP 1O HIGHLIGHTS ?
Issa lists seven high-yield bonds as being worth more than $50 million — the highest disclosure category
McCaul’s wealth is entirely connected to his wife, Linda McCaul, the daughter of Clear Channel Communications founder Lowry Mays.
Delaney founded HealthCare Financial Partners as a young lawyer in 1993, which specialized in lending money to smaller medical firms. He sold his controlling interest six years later for more than half a billion dollars and used the profits to start CapitalSource of Chevy Chase, Md., which loans to small and midsize businesses that can’t get credit at good rates from bigger banks.
Rockefeller, an heir of the oil tycoon John D. Rockefeller,
After taking a job out of law school as a fundraiser for the Democratic National Committee, Warner started ventures in energy and real estate, but really hit it big in telecommunications. He convinced some investors to help him purchase cellular telephone licenses the government was selling for a relative song in the early 1980s and then staked a big and early claim in Nextel,
Jared Polis The youngest lawmaker among the ten wealthiest members of Congress, Polis has a diverse and unusual portfolio stocked with emerging growth and startup investments.
Blumenthal's 2013 filing is speckled with private equity and hedge fund holdings. There's also a real estate company in Sao Paulo, Brazil, multiple properties in midtown Manhattan and entities that leased and operated the Empire State Building. Blumenthal additionally lists at least $600,000 worth of gold held at JPMorgan.
Scott Peters That’s thanks in part to the investments he made with the millions he earned as an environmental attorney in the 1990s representing businesses and government agencies in their regulatory disputes. But it’s also because his wife, Lynn Gorguze, has been successful at the helm of Cameron Holdings, a private equity firm focused on manufacturing enterprises established by her father, former Emerson Electric executive Vincent Gorguze.
Not much has changed for Feinstein and her husband, private equity magnate Richard Blum, except that the form published for 2013 did not show the $2 million in liabilities present a year ago.
Feinstein's a classic case of one of the biggest faults in the reporting requirements: assets in Blum's name may be reported in a broad category of more than $1 million, so the calculated minimum net worth may be a significant understatement.
DelBene saw her wealth increase substantially over the past year as the price of stock in Microsoft, where she and her husband both worked as executives, rose and they sold it off.
The Washington Democrat reported a minimum of $37.9 million in assets in 2014. That's $14 million more than last year, when the freshman lawmaker first landed on the list. She is the second wealthiest woman in Congress and is tops among first-term, female lawmakers.
She and her husband, Kurt, who left Microsoft last year and now oversees the federal government’s online health care enrollment website, healthcare.gov, made at least $2.5 million last year by selling off their remaining stock in the technology giant. Not surprisingly, Kurt DelBene returned his federal salary to the U.S. Treasury.
The largest new asset the couple listed is their main residence worth at least $5 million in Medina, Wash., a tony enclave just outside of Seattle.
Oh Really?
From Roll Call
Complete List. For the first time, we went a step further by publishing a ranking of every single lawmaker by their minimum net worth. That full list with breakdowns of members' assets and liabilities is found below.
http://media.cq.com/50Richest/
This thread's too much fun. Don't wanta get into trouble. But, anybody know how the fan fiasco turned out in FLA? Did they get that weighty issue facing the Republic resolved?