History Says to Buy Stocks Right Now Before It's Too Late
Stocks have a strong history of outperformance following midterm elections.
Overview
If you have a long time horizon, arguably "now" is always the best time to buy stocks. After all, the S&P 500 index (SNPINDEX: ^GSPC) has always gone up over the long term. Even if you bought an S&P 500 exchange-traded fund (ETF), like the Vanguard S&P 500 ETF (NYSEMKT: VOO), right before a market crash, you'd still be in good shape over the long term, and even better if you kept dollar-cost averaging into the fund.
However, from a historical standpoint, now is actually the best time to invest in the market. If you break out the market into 16 quarters based on election cycles, the three strongest periods are the fourth quarter of year two following mid-term elections and the first and second quarters of year three. In other words, the three quarters coming up starting this October.
Details
According to Carson Research, the S&P 500 has finished higher in the fourth quarter following a midterm election more than 84% of the time since 1950, producing an average return of 6.6% over that three-month stretch. The first quarter of the following year tends to be even stronger, with stocks rising nearly 95% of the time, with a strong 7.4% average gain. The second quarter of year three of the election cycle has also been good, with the S&P 500 posting positive returns nearly 74% of the time, with an average gain of 5%.
Source
Originally published at www.fool.com.