Love Him or Hate Him…

Mostly people hate him, some still love him, but one thing that cannot be argued is that the stock market performance (U.S. not Canada) since Trump became president, has returned over 50%. This is more than double the historical average of 23%, when a president is three years into their term.

Whether he is directly responsible or not, can be debated, but as things currently stand, he is looking pretty good.

Interest rates remain at historic lows, unemployment is essentially zero (3.5% is considered to be full employment), corporate profitability remains strong, consumers are spending and housing seems to have recovered.

So what does history predict for the coming year? Typically the fourth year of an incumbent president is a good one, with markets positive almost 70% of the time.

So what do we think? Well in the very short term (think days to a couple of months) the market does seem to have got ahead of itself a little, and we would not be surprised to see some sort of pullback as indicated by the below graph. In light of this we have taken some profits in stocks that have reached and surpassed their previous all-time highs.

Longer term however we remain with the thesis that things look pretty good.  We expect the U.S. economy and stock market to continue to lead the way (rather than Europe, China or Canada), and would not at all be surprised to see a decent (though not as good as 2019) year again.

And if you were wondering where most of the gains game from, the below chart will give you some indication. If you didn’t own any of the below then you may well have been missing out.

Current GIC rates*

Jan 10 2020

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