We are only three months away from the third year of George Bush's term. In the entire history of the S&P 500 there have been only two negative third years of any President's term. They were both long ago: in 1931, in the midst of the 1929--32 crash, and in 1939, as we entered World War II. Both very weird and unusual times.
All other third years were double-digit positive, except single-digit positives in 1947 and 1987. The average return in third years is 20%. In fact, there have been only five negative S&P 500 years in the back half of presidential terms. Market risk is highest in the front half of Presidents' terms, which is historically when most attempts at redistributive legislation have occurred. Once the midterms are over, it gets better. It will be no different in 2007. If the S&P 500 is up, the world market will be, too. Good times are close at hand. The time to buy is now, before the perception of political risk fades.
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All other third years were double-digit positive, except single-digit positives in 1947 and 1987. The average return in third years is 20%. In fact, there have been only five negative S&P 500 years in the back half of presidential terms. Market risk is highest in the front half of Presidents' terms, which is historically when most attempts at redistributive legislation have occurred. Once the midterms are over, it gets better. It will be no different in 2007. If the S&P 500 is up, the world market will be, too. Good times are close at hand. The time to buy is now, before the perception of political risk fades.
Read the complete column
