The pollsters got it wrong but the stock market still has a chance

Webinar Hosted by Advisor Perspectives - Investors Need Yield: A Distinct Nasdaq Approach for a Zero-Yield World.

Meeting cash flow needs through distributions is becoming challenging with Treasury yields at rock bottom levels and investors enduring widespread dividend cuts this year. Trying to generate a meaningful yield often means unacceptable credit risk at a time when the bankruptcies are just starting to get announced following months of government-mandated shutdowns. For investors looking to fund their day-to-day lives, a better approach may be to focus on maximizing risk-adjusted returns and manufacturing a distribution to meet individual cash flow needs while managing risk and return. Target distribution strategies seek to leverage a modern portfolio theory approach focused on risk-adjusted returns to deliver steady cash flow to investors while maintaining the principal over the long-run. The webinar is scheduled for Thursday, November 12 @ 2pm EST.

Copy and paste the link below into your browser to register for the event:

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Beginners Series Webinar: Join us on Friday, November 6^th, at 2 PM (ET) for our NDW Beginners Series Webinar. This week's topic is Navigating a Point & Figure Chart Page.

Copy and paste the link below into your browser to register for the series:

nasdaq.zoom.us/webinar/register/7915519908388/WN_go_ZASGiSI6Qc5a7mmx7XA

The year 2020 is one for the books, no questions on that. However, many questions do remain about who the next President of the United States will be. As loudly conveyed the pollsters got it wrong this time, but the stock market still has a chance. In a year where precedent and normalcy seem to be long gone, we look to one of the last market adages for some guidance in the uncertain political climate.

Stock market returns leading up to a US Presidential Election historically produce a rather accurate signal of which party will win. If looking at the S&P 500 Index (S&P 90 prior to the election of 1960) price returns 91 days out from an election, we find that a positive/negative market return indicated the winning party 87% of the time, or 20 out of the 23 past elections. A negative return suggesting a change of party, while a positive return indicating the incumbent party being reelected. Since 1984, the indicator has been 100% accurate.

However, as displayed above, in 2020 we recorded the S&P 500 with a razor-thin return of 0.11% 91 days prior to the election, the smallest of gains in our study. As perhaps deduced, if the incumbent party is not reelected in 2020, this would mark the indicator’s first miss in over 35 years (about 9 elections).