NDR: Presidential cycles often start weak and gain momentum

Since March 2009, NDR has identified the ongoing secular bull market for stocks, while noting that the current cyclical trend turned bullish again in October 2022. However, with optimism currently running high, now is an opportune time to assess potential risks and remain flexible should market trends weaken in the coming year.

Given the timing post-election, it might be useful to revisit the presidential election cycle. Historically, the bull market often extends into the first year following a presidential election. However, the initial two years tend to be volatile, with many bear markets beginning in the first year and continuing into the midterm election year (chart above). For instance, a bear market started in 2021 and persisted into 2022. This pattern could stem from shifts in fiscal policy that sometimes yield unintended consequences. As politicians typically work to stimulate the economy ahead of the next presidential election, the market often rallies strongly in the third and fourth years of the cycle, similar to the robust gains seen in 2023 and 2024.

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