Historical data shows that there is no statistically significant pattern as to what happens to the stock market one year after an election.
However, the data shows profits are consistently made by focusing on buying sectors that are favored by the winner and short-selling the sectors that are disfavored by the winner.
Here is the data for the S&P 500 SPX change one year after the start of a new presidential term.
2008: 26.5% gain
2004: 4.1% gain
2000: 15.6% loss
1996: 23.8% gain
1992: 5.7% gain
1988: 13.2% gain
1984: 16.8% gain
1980: 18.5% loss
Romney favors tighter monetary policy, declaring China as a currency manipulator, coal, the Keystone pipeline, and defense.
Our favorite Romney winners are J.P. Morgan Chase JPM, Bank of America Corp. BAC, Citigroup C, Peabody Energy BTU, Alpha Natural Resources Inc. ANR , General Dynamics GD, Thompson Creek Metals Co. TC, Lockheed Martin Corp. LMT , ProShares Short 20+ Year Treasury TBF , TBT, and Northrop Grumman Corp. NOC.
Our favorite Romney losers are SPDR Gold Trust GLD, iShares Silver Trust SLV, Silver Wheaton Corp. SLW, Coeur d’Alene Mines Corp. CDE , Hecla Mining Co. HL , and Apple Inc. AAPL .
On the first blush, the appearance of Apple as a loser may seem strange. However, a big part of the Apple bull case is growth in China. Romney has repeatedly stated that he will declare China a currency manipulator on his first day in office. A Romney victory will start a trade war with China, and it will hurt Apple.
A Romney win is negative for gold and silver….Read more at MarketWatch
