S&P 500 (SPY, SPX) prediction
Since 1948, stock index, Standard & Poor’s (hereinafter S & P) for “500″ company that provides reliable “predictor” is whether the current president re-elected, says Sam Stovall, chief strategist at S & P Capital IQ.
S & P «500» excellently coped with such work as “an instrument of forecasting election results,” all the past 62 years, with an accuracy of 88%, says Stovall, who is also chairman of the Investment Policy Committee of the S & P.
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That’s what experience has shown: the changes in the cost of the shares of companies included in the S & P «500», during the three months leading up to presidential elections – a good indicator: whether there will be acting president in his chair, or will be re-elected.
In particular, when the index S & P «500» is increased from 31 July to 31 October – the current president will be reelected.
But when the S & P «500″ reports a loss in value of their shares during the period – to be “reset” the White House.
“Thus, we should pay close attention to market indicators within three months from July to October, up to the presidential election in November”, says Stovall. “It would probably be better than many forecasts, political scientists,” he says.
S & P «500″ was also a good guide for investors and a number of other important indicators. One of them includes the so-called “January effect”, which demonstrates how the behavior of the stock market in January, “predicts”, as the case will go throughout the year. “Barometer of January” are right in this prediction, almost 100%, says Stovall.
That is growth, with whom the index S & P «500″ raised during the presidential elections of recent years – is “right” 75% of cases.
Add to this the fact that the index successfully predicted with a probability of 88% possibility of “re” of the current president, and all together, in aggregate, will receive the absolute figures “return on investment,” convinces Stovall.
Another important consideration for investors is that shares of S & P «500», work best in a presidential election year.
The result would surprise many:
Since 1972, the shares of S & P 500, located in the energy sector, showed strong results in a presidential election year, gaining an average 15.6% to the cost – “lifting” the market by 80% (compared to average 5.9% before).
Market in the consumer sector ranked second in average gaining 10.2%. The growth of the industrial sector also exceeded expectations.
However, be careful with the information technology market, as well as commodity groups, and telecommunications services. Some of the shares of individual companies in these sectors may well “work”, but as a group, they “mark” weak performance during the presidential elections during this period, says Stovall.
