Third Quarter Comments
October 2016
The other day we received the following list of presidential election tidbits from one of our suppliers of macro
research, Strategas Research Partners. We thought it provided some interesting context for what has obviously
become a contentious and at times confusing election cycle. We appreciate Strategas’s permission to share
their thoughts. Please feel free to share yours with us as well. Thank you.
10 THINGS YOU SHOULD KNOW ABOUT THE PRESIDENTIAL
ELECTION CYCLE
 The performance of the S&P in the three months before the election has correctly predicted the success of
the incumbent party 86% of the time since 1928.
 Regardless of the outcome, a relief rally follows the election.
 Since 1936, the market has performed better in the 12-months following election of a Democrat rather
than a Republican.
 Market highs are more often established in the 4th quarter of the 4th year of a Presidential election cycle.
 Conversely, market lows are more often established in the 1st quarter of the 1st year of a Presidential
election cycle.
 On average, the best year for the market in the election cycle is the third, as Presidents gear up for
reelection. The worst year is the first, as Presidents make tough choices with their newly attained political
capital. In recent years, however, the cycle has shifted, with year 1 being the best and year 3 struggling,
depending on the timing of fiscal policy stimulus and austerity
 These differences in yearly returns are more acute in Republican administrations than they are in
Democratic ones.
 The best scenario for the market lies with a Republican President and a Republican Congress. The worst
performance occurs with a Republican President and Democratic Congress. Equity markets have generally
rewarded divided government with a Democratic President and Republican Congress.
 With the exception of President Hoover’s election, “third-term” Presidencies have been good for stocks in
the first year of the new Administration.
 Fed inaction during an election year has not always been the norm. The Fed was especially active in the
Reagan years. Since 1984, there has never been a hike in the Fed Funds rate in October of the election year.
Securities offered through Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services offered through Cambridge
Investment Research Advisors, Inc. a Registered Investment Adviser. Cambridge and Medallion Wealth Management, Inc. are not affiliated. Asset
allocation and diversification strategies cannot assure profit or protect against loss in a generally declining market, and past performance does not
guarantee future results. Material discussed herewith is meant for general illustration and/or informational purposes only. Please note that individual
situations can vary; therefore, the information should be relied upon when coordinated with individual professional advice.
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