It’s now been over two years since Donald Trump was sworn in at the 45th President of the United States.
For US stocks, that means 2019 could be a very good year if history is any guide.
As seen in the chart below from AMP Capital, since 1927, the average return in the third year of a presidential term sits at 17.8%, more than six percentage points higher than any other year of the presidential cycle.
Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Capital, says it’s not all that surprising that the third year of a presidential term has outperformed all others over the past 90 years.
“[It’s because] the president does his best to ensure the economy is in good shape for his re-election year Of course,” Oliver says. “For this year, it would be consistent with Trump seeking to support growth and this would include solving the trade war and ending the government shutdown.”
Oliver admits that strong stock market returns “doesn’t always work” in the third year of the electoral cycle, providing a reminder that past performance is not indicative returns.
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