Greece is burning, Italy's imploding, and the U.S. economy is limping along in a recovery so weak it's barely stronger than a recession. And investors are reeling.
But next year may turn out to be pretty good for stocks.
How can I say that? Because from here on, the market's historic calendar is in investors' favor.
And if we can stay out of recession in the United States and avoid one in the developing world, earnings of U.S. companies may hold up well enough to support somewhat higher stock prices. (A recession in Europe is already baked into the cake.)
Most of all, 2012 is a presidential election year; since 1948, markets have gained in every presidential election year except 2000 and 2008. In fact, stocks have, on average, put in their second-best performance in the fourth year of a president's term. (The third year has been best.)
And during years in which incumbent presidents run for re-election, the market has beaten its average election-year performance significantly.
It doesn't matter if the incumbent wins or loses (though no investor can know that in advance) or how good or bad a president he was. The market has just done better in "incumbent" election years than in "up for grabs" elections, like Bush vs. Gore in 2000 or McCain vs. Obama in 2008.
-- Howard Gold
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