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As an absolute “highlight” or an important source of encouragement, in last year’s annual outlook we pointed out the ideal investment period from the US midterm elections to the actual election of the US President. As a reminder: If investors had used the “midterms” to enter the S&P 500® at the end of November and had held these long commitments for two years until after the actual presidential election, then such an investment would have occurred in 95% of all cases since 1945 been successful. Only once – from 2006 to 2008 – did American standard stocks suffer price losses in these two-year periods. In the historical rearview mirror, the “midterms” mark the starting point of a relatively stress-free investment period. Perhaps even more important than probability is the absolute level of the price return: on average, the S&P 500® has gained 24% since 1945 from the “midterms” to the actual election of the US President. So far, the American “blue chips” have only seen a price increase of a good 11%, which means they are still a long way from reaching the historical average. In a seasonal context, this “performance hole” is more likely to be reduced in the second half of 2024.
S&P 500® (Monthly)
Source: Refinitiv, HSBC² / 5-year chart attached
5-year chart S&P 500®
Source: Refinitiv, tradesignal²
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