“As the election cycle kicks into full swing, it is useful to take a look at what history tells us about equity market returns during presidential election years,” The Financial Lexicon writes for Seeking Alpha.
“Given that the popular S&P 500 (IVV) first debuted in its current form on March 4, 1957, I took a look at all presidential election years dating back to 1960,” The Financial Lexicon reports. “Since that time, there have been 13 presidential election years, 10 of which saw positive returns for the S&P 500 SPY and only three of which ended with negative returns. This 77% success rate is even more impressive when considering that 2000 and 2008 declines can be attributed to the equity markets finally realizing there were bubbles that needed popping (tech and excessive leverage) and stocks reacting accordingly.”
“In the S&P 500, Exxon Mobil (XOM) and Apple (AAPL) are currently the top-weighted stocks at 3.51% and 3.36% respectively, and will have the most influence of any two stocks on S&P 500 returns in 2012,” The Financial Lexicon writes. “Will oil prices stay at triple-digit levels, helping XOM to break out above its 2011 high of $88.23, thereby helping to pull the S&P 500 up with it? With respect to Apple, perhaps the single most loved stock in the history of world equity markets, it’s hard to even think of a reason why this stock wouldn’t just keep going higher. People are obsessed with its products, its cash hoard is large and growing, and its stock continues to keep making higher highs and higher lows since March 2009.”
The Financial Lexicon writes, “”What in the world could go wrong for Apple and its massive 15%+ weighting in the Nasdaq 100? Perhaps I am grasping at straws, but even though the thought of incurring the wrath of untold numbers of smitten Apple investors is enough to strike fear into the heart of any writer, I will nevertheless ask the following four questions regarding Apple’s stock: Are growth investors already all-in on the stock? If Apple doesn’t relent and begin to pay a dividend, will it have trouble attracting new types of investors going forward? Why is the forward P/E so low? And, do you think there will be a multiple expansion going forward given how well-known the amazing Apple story already is? Think about these things as the year progresses. Whatever lies ahead for Apple’s stock in 2012 may very well also be the future of the Nasdaq 100 and other major market averages.”
Read more in the full article here.
[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]