Oh, why not? This is the time of year that supposed experts are making predictions on what will happen in 2016 for everything from hemlines to weather. So why not me? Are you ready? Here are my predictions for 2016:
Hemlines: No comment, though I have preferences.
Weather: There is a 100% chance the weather will continue to do whatever it wants to, whenever it wants to and it will snow on me whenever I go to the Front Range, even in July.
Sports: The Bronco’s will win the Super Bowl in February. Not this February, but some February. The NHL will continue to have more fights per game than goals scored. Defense will continue to not be played in the NBA. Major League Baseball season will continue for seemingly forever.
What? You want me to prognosticate on something I know about? You want me to predict what the stock market is going to do in 2016? I’d rather predict the direction of hemlines. But here’s something for you to ponder as you sip your champagne.
2016 is a Presidential election year and going back through the previous 21 presidential election years since 1928, the S&P 500 Index has been negative only 3 times. The index was negative in 1932 when Roosevelt ran against Hoover, in 2000 when Bush ran against Gore and again in 2008 when Obama ran against McCain. In 18 of those 21 times or 85.7%, the index was positive for the year.[1]
I have a theory about this. First, during presidential election years not much else gets done in Washington. Everyone is too busy running for re-election and not wanting to vote on anything remotely controversial that might jeopardize their re-election chances. Therefore we investors know that the rules of the game aren’t likely to change. Nothing is likely coming out of Washington that would disrupt the economy.
The second thing that I think is unique about presidential election years is a sense of optimism in the electorate. The party that is in the White House is optimistic they will retain their position while the party that is not in the White House is optimistic that they will win it back on Election Day. When people are generally optimistic, they tend to be more willing to invest.
So, that’s as close as I’m getting to a prediction on the stock market for 2016. Now I’m off to do more research on the direction of hemlines.
[1] http://moneyover55.about.com/od/howtoinvest/a/electionmarket.htm
Mike Berry is a Registered Representative offering securities through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Legacy Wealth Management, LLC and Cambridge are not affiliated. Cambridge does not offer tax advice.
Copyright ©2015 Mike Berry. All Rights reserved. Commercial copying, duplication or reproduction is prohibited.
