Milan Cacic
November 04, 2022
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THE GLASS IS HALF-FULL!
Last week I mentioned that bull markets tend to follow bear markets. This week I would like to show you some historical data about market returns with regard to mid-term elections and market bounces after a 20% drop.
Now let's be clear, I understand there's lots going on in the world. Wars, supply chain issues, inflation and a potential recession looming... All of these things are concerning and can make us act like a deer caught in headlights. At times like these, it's best to look at historical data that could help us make better-informed decisions.
The first chart I would like to show you is the returns of the S&P 500 after experiencing a 20% drawdown from record highs. As you can see from the chart below, the average return after the drawdown was 4%, 15%, and 26% higher six months, one year and two years later.
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An even more telling chart is below. On November 8th, 2022 the United States goes to the poles for a mid-term election. On average, the S&P 500 Index is 16.1%, 18.6% and 33.7% higher, 6-, 12- and 24-months after mid-term elections. The fact that we are coming off a major market drop combined with a midterm election makes me feel like the glass is half full when it comes to the market!
I have also include a piece from our CIBC Economics Team entitled “Canada federal economic and fiscal update”.
If you have any questions please feel free to give us a call.
Have a great weekend
Milan
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