Presidential Cycle Suggests Stocks Will Go Higher and Interest Rates Lower in 2011

There are plenty of reasons to be concerned about the U.S. economy in 2011 [but not for U.S. stocks if the history of] the Presidential Cycle is any indication. The third year of a president’s [four year] term is typically the strongest producing an average annual gain of 14.12% for the S&P 500 and, under Democratic leadership, that number moves even higher to an average gain of 17.7%! Words: 436

So says Nilus Mattive (www.moneyandmarkets.com) in an article* which Lorimer Wilson, editor of www.munKNEE.com, has reformatted and edited […] below for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement. Mattive goes on to say:

Take a look …

Why Do Stocks Do So Well In the 3rd Year of the Presidential Cycle?

The third year may be so magical for stocks because investors have had a chance to thoroughly digest the new administration’s policies [and] many of those policy changes have had plenty of time to get implemented. In contrast, the first year of a president’s term — which is full of uncertainty — is usually the worst for stocks, producing an average gain of just 3.1%! The data also points to better overall gains for the third year of a first-term president than for the second-term president.

What Effect Does Congressional Gridlock Have On…

a) Stocks?

The S&P 500 has risen an average of 4% under Congressional gridlock … twice that much when the divide was only between Congress and the White House … and nearly three times as fast when one party ruled the whole roost.

b) Interest Rates?

Based on data from the last 50 years, 10-year Treasury prices have typically risen more when Republicans have controlled at least one house of Congress.

Conclusion

All other things being equal, we can expect stocks to rise considerably and interest rates to drop further in 2011. [As such,]

Dividend stocks [should do extremely well]

*http://www.moneyandmarkets.com/one-reason-to-bet-on-u-s-stocks-in-2011-42104?FIELD9=7

Editor’s Note:

The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.

Permission to reprint in whole or in part is gladly granted, provided full credit is given as per paragraph 2 above.

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