Marc Chaikin has often said that when it comes to investing, it's important to put your politics aside and stay focused on the markets...
Editor's note: Marc Chaikin has often said that when it comes to investing, it's important to put your politics aside and stay focused on the markets... Over at our corporate affiliate Stansberry Research, it's no surprise that our friend Brett Eversole agrees – especially amid the recent polarizing election cycle. But as he explains today, there's more to it than that... This essay from Brett published last Thursday in his free DailyWealth e-letter. And in it, he says where we are in the presidency is crucial when it comes to gains in the markets...
The New 'Best Year' for Stocks Is Underway
By Brett Eversole, editor, Stansberry Research
Last Monday, President Trump took his oath of office for the second time. The event split our country in half once again. Half celebrated, and half mourned. Regardless of what camp you fell into, it's crucial to remember one thing: Mixing your politics with investing is a terrible idea. You can't sell everything just because you hate whoever is in office. And you can't blindly buy just because your candidate won. The truth is that markets tend not to care which party is in power. It's not that the choice of president doesn't matter... But it matters much less to stocks than you probably expect. There's something about a new presidency that really matters though. It restarts the clock on the election cycle... a market pattern with nearly a century of data behind it. We just started Year 1 of the election cycle. As I'll share today, this is the new "best year" for stocks... And it points to another double-digit rally in 2025.
Tomorrow, our friends at our corporate affiliate Stansberry Research are unveiling a financial game plan for 2025 – the ONE place you can put your money right now for huge potential returns. It's not gold, crypto, the S&P 500, or real estate. But it's the perfect way to grow your money through 2025 and beyond. Everything you need to know is right here.
Fifty-year Wall Street legend Marc Chaikin believes a critical postelection surprise is heading straight for U.S. stocks. While most Americans were distracted by the election, geopolitical turmoil, and recent market volatility... Marc watched a powerful market signal (with 93% historical accuracy) flash quietly. He explains what it means and what to do here.
The president might not matter much to the markets. But where we are in their presidency is crucial. In other words, markets care about when, not about who. We call this phenomenon the election-cycle indicator. It's logically founded and well known in the investment community. Here's how it goes... Presidents spend their first year on their most ambitious policy ideas. This is when they swing for the fences... And that means they tend to ignore the economy and markets. However, after midterm elections, the president begins to focus on reelection. The best way to get yourself or your party reelected is to improve the economy. And that improvement ends up driving markets higher. This cycle means the first two years of a presidency tend to be the worst for stocks. The third is by far the best, and the fourth is second best. The data backs this up. Here's how the election cycle has played out in the S&P 500 Index since 1928...
There's a clear pattern here. Year 1 is OK. Year 2 stinks. Year 3 is far and away the best. And Year 4 is a solid second place. You've probably read about this cycle over the years. It matters. And normally, entering Year 1 isn't something we'd note as bullish for stocks. Here's something you might not realize, though... The election cycle has shifted over time. Over the past 10 election cycles, the third year hasn't been the only one that counts. In fact, Year 1 has become the biggest winner. Here's the data since 1984...
Since 1984, years 2, 3, and 4 haven't changed much. But Year 1 has seen a stark improvement. It's now the most profitable year of the election cycle, with a typical gain of 17.2%. Plus, the market ended higher in the first year 90% of the time... And we saw a 20%-plus gain in six of the 10 cases. That's a stellar result, with consistently high returns. Plus, it's a massive change compared with history. The next question is, why? It could be that presidents now spend more energy on the economy early on... Or maybe as political gridlock has increased, new presidents are less effective in their first year. Markets like gridlock – it means less uncertainty. In any case, the shift that has taken place is clear. Year 1 of the election cycle is the new "best year" for stocks... And that's where we are now. Most investors are still looking for reasons to sell. But the smarter call is to be bullish today. And this is one more reason to expect good things for stocks in 2025. Good investing, Brett Eversole
Editor's note: In DailyWealth, Brett and his colleagues share insights like this each weekday morning that the markets are open. And this e-letter is completely free to read – just like the Chaikin PowerFeed. If you aren't already a DailyWealth reader, learn how to sign up for it by clicking here.
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
-0.28%
11
12
7
S&P 500
-0.29%
102
246
150
Nasdaq
-0.57%
29
45
26
Small Caps
-0.28%
411
1054
438
Bonds
+0.45%
Utilities
+1.02%
5
19
7
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain somewhat Bearish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Communication
+3.1%
Health Care
+2.95%
Industrials
+2.41%
Information Technology
+2.22%
Financial
+1.23%
Real Estate
+1.14%
Staples
+0.85%
Utilities
+0.82%
Materials
+0.76%
Discretionary
+0.34%
Energy
-2.82%
* * * *
Industry Focus
Semiconductor Services
8
24
8
Over the past 6 months, the Semiconductor subsector (XSD) has underperformed the S&P 500 by -3.83%. Its Power Bar ratio which measures future potential is Neutral, with an equal number of Bullish and Bearish stocks. It is currently ranked #11 of 21 subsectors.
Indicative Stocks
WOLF
Wolfspeed, Inc.
POWI
Power Integrations,
MCHP
Microchip Technology
* * * *
Top Movers
Gainers
NEE
+5.2%
WELL
+3.41%
LULU
+3.14%
EL
+2.96%
EPAM
+2.91%
Losers
TXN
-7.52%
CF
-7.5%
MCHP
-5.34%
ADI
-4.81%
ABNB
-4.62%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
HCA, T, WRB
NUE
ARE, BRO
No earnings reporting today.
Earnings Surprises
FCNC.A First Citizens BancShares, Inc.
Q3
$45.87
Missed by $-1.63
HCA HCA Healthcare, Inc.
Q4
$6.22
Beat by $0.08
AXP American Express Company
Q4
$3.04
Missed by $-0.01
NEE NextEra Energy, Inc.
Q4
$0.53
Met estimate
VZ Verizon Communications Inc.
Q4
$1.10
Met estimate
* * * *
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