February 20, 2019

The President’s Day break seems to be a propitious time to point out that the pre-election year has been the best historic year since 1940 in the stock market, a winning year for 18 of the last 19 election cycles, up an average 15%, and we’re up 11% so far this year, so there’s no reason to think 2018 is an exception.

Since 1940, pre-election years have delivered more than twice the average gains of any other year in the election cycle. Why? Pre-election years tend to rise more than most years since Americans are usually optimistic about the “hope and change” that new candidates bring in the months before an election.

The last pre-election year, 2015, was an anomaly since the presumed winners in 2015 looked like a rather dismal re-run between the third Bush (Jeb) and the second Clinton (Hillary), neither of which aroused much enthusiasm – even in their own Party, much less the population at large. To add to the gloom in 2015, U.S. GDP slowed to a snail’s pace (+0.7%) in the second half of the year, hence a small -2.2% decline in the Dow in 2015. That malaise eventually led to an unexpected victory for Donald Trump.

Handicapping 2020 – Waiting for the “Adults” to Arrive

As I read the Constitution over this President’s Day weekend, Article II painted a fairly easy picture of the President’s job. His tasks are mostly ceremonial: He is an appointer of various offices, pardoner of selected miscreants, communicator in an annual State of the Union talk, commander in chief (not in the field, but as a civilian controller of armed forces), and he can make treaties, with 67% Senate approval.

In the last century, however, we have wanted more of a king, an all-powerful imperial President, doubling as the “leader of the Free World,” operating well outside the Constitutional bounds. This time around, we face the prospect of up to 20 Democratic hopefuls in 2020, with the first announced candidates calling for radical changes far outside the Constitution’s enumerated powers for either Congress or the Presidency:

  • Medicare for All (proposed by Senators Bernie Sanders, Kamala Harris, Elizabeth Warren, and 13 other Senators) would replace all private health insurance with a federally-administered single payer. Some bureaucrat 30 to 3,000 miles from your doctor would decide what drug to pay for, what care to deliver, and how much to pay. Private insurance would be banned. The program would cost at least $3.5 trillion a year – more than doubling all current spending, doubling taxes.
  • The Green New Deal (proposed by Rep. Alexandra Ocasia-Cortes and endorsed by 70 other Representatives and four Presidential candidates) calls for the elimination of fossil fuel energy production by 2030, eliminating 99% of all cars and airplanes, the gutting of virtually every building in America, not to mention free education for life, free housing, free food (but no beef!)
  • A Corporate New Deal (proposed by Elizabeth Warren) calls for businesses with over $1 billion in annual revenues to make employees 40% of board directors, while requiring outside governors to insure that the company provides vague “benefits” to society beyond mere profits and revenue.

These programs and others include a guaranteed job for all and vastly higher taxes. Ms. Ocasio-Cortes favors 60% to 70% tax rates for the “tippy-top” taxpayers (yes, that’s her quote from 60 Minutes). Mr. Sanders wants to raise the top death tax rate to 77%. The House Ways and Means committee wants to raise the payroll tax to nearly 15% (14.8%), which comes on top of federal, state, and local income taxes. Ms. Warren wants to add a 2% wealth tax on assets above $50 million and 3% on assets above $1 billion.

There are a lot more programs for bringing the American economic engine to a halt, but these comprise a fair sampling of their opening offers. This, of course, puts the Republicans in the role of trying to save capitalism from the plundering hands of the kleptocrats. If one of these many socialist candidates wins in 2020, we can expect a recession and market crash in late 2020 or early 2021, but if some adult enters the party from stage left – perhaps Joe Biden or even Howard Schultz – he can lend some sanity to the race.

Joe Biden has been known to say some very silly things when schmoozing for votes, but he certainly comes across as far more adult-like than the army of other Presidential choices facing us these days.

About The Author

Gary Alexander
SENIOR EDITOR

Gary Alexander has been Senior Writer at Navellier since 2009.  He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks.  For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.

Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s.  He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division.  Before that, he covered the economics beat for news magazines. *All content of “Growth Mail” represents the opinion of Gary Alexander*

Disclosures

Although information in these reports has been obtained from and is based upon sources that Navellier believes to be reliable, Navellier does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Navellier’s judgment as of the date the report was created and are subject to change without notice. These reports are for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in these reports must take into account existing public information on such securities or any registered prospectus.

Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any securities recommendations made by Navellier. in the future will be profitable or equal the performance of securities made in this report.

Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.

None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation of any offer to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The reader should not assume that investments in the securities identified and discussed were or will be profitable.

Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for you. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. Investment in fixed income securities has the potential for the investment return and principal value of an investment to fluctuate so that an investor’s holdings, when redeemed, may be worth less than their original cost.

One cannot invest directly in an index. Results presented include the reinvestment of all dividends and other earnings.

Past performance is no indication of future results.

FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not intended or written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.

IMPORTANT NEWSLETTER DISCLOSURE: The hypothetical performance results for investment newsletters that are authored or edited by Louis Navellier, including Louis Navellier’s Growth Investor, Louis Navellier’s Breakthrough Stocks, Louis Navellier’s Accelerated Profits, and Louis Navellier’s Platinum Club, are not based on any actual securities trading, portfolio, or accounts, and the newsletters’ reported hypothetical performances should be considered mere “paper” or proforma hypothetical performance results and are not actual performance of real world trades.  Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier Investment Products’ portfolios and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters contain hypothetical performance that do not include transaction costs, advisory fees, or other fees a client might incur if actual investments and trades were being made by an investor. As a result, newsletter performance should not be used to evaluate Navellier Investment services which are separate and different from the newsletters. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or hypothetical Newsletter performance claims, (which are calculated solely by Investor Place Media and not Navellier) should be referred to InvestorPlace Media, LLC at (800) 718-8289.

Please note that Navellier & Associates and the Navellier Private Client Group are managed completely independent of the newsletters owned and published by InvestorPlace Media, LLC and written and edited by Louis Navellier, and investment performance of the newsletters should in no way be considered indicative of potential future investment performance for any Navellier & Associates separately managed account portfolio. Potential investors should consult with their financial advisor before investing in any Navellier Investment Product.

Navellier claims compliance with Global Investment Performance Standards (GIPS). To receive a complete list and descriptions of Navellier’s composites and/or a presentation that adheres to the GIPS standards, please contact Navellier or click here. It should not be assumed that any securities recommendations made by Navellier & Associates, Inc. in the future will be profitable or equal the performance of securities made in this report. Request here a list of recommendations made by Navellier & Associates, Inc. for the preceding twelve months, please contact Tim Hope at (775) 785-9416.

Marketmail Archives