Strange but true: The S&P 500 has been solidly higher 12 months after the midterm elections in every cycle since 1954, according to Yardeni Research, regardless of which party won or lost. The broad market index’s average one-year gain in 17 post-election windows has been around 15%. These facts are on our minds this Election Day, as voters cast their ballots amid a tough year on Wall Street. Everyone is wondering when we will see, or if we have already seen, the bottom of the current bear market. Of course, past performance is no guide to future performance, and right now many strategists are concerned that fears of inflation and recession may continue to weigh on stocks. We recognize that the uncertain macro environment could complicate the usual post-midterm rally. Nevertheless, we think the story is worth pointing out to the club’s members. We also wanted to zoom in on it through a club-specific lens and analyze how the 31 stocks in Jim Cramer’s Charitable Trust have performed in the 12 months since the last midterm election. Here’s what we did, with some caveats. We looked at just the past five midterms – 2018, 2014, 2010, 2006 and 2002 – to see which current club stocks had the biggest 12-month gains after the election. The S&P 500’s average 12-month gain after these five picks is 8.3%. A limitation of the exercise is that not all stocks in our portfolio were publicly traded in all five election cycles. Salesforce ( CRM ) and Alphabet ( GOOGL ) held IPOs in the summer of 2004, while Facebook parent Meta Platforms ( META ) went public in May 2012. While we chose to highlight the best performers, there were also underperformers and stocks that were in the red in each of the previous cycles we looked at. This exercise is designed to show how much stocks moved during these bullish cycles, not why they performed the way they did. 2018 Picks These are the five Club stocks with the biggest gains between November 6, 2018 – when the midterms were held – and November 6, 2019: Advanced Micro Devices (AMD), Microsoft (MSFT), Qualcomm (QCOM), Procter & Gamble (PG) and Estee Lauder (EL). The S & P 500 advanced 11.7% during that stretch. 2014 Picks The S & P 500 rose 4.5% between November 4, 2014, and November 4, 2015. These are the top five club stocks over the past 12 months: Amazon ( AMZN ), Starbucks ( SBUX ), Constellation Brands ( STZ ), Nvidia ( NVDA ) and Meta platforms. The 2010 Election Between November 2, 2010 and November 2, 2011, the S & P 500 rose 3.7%. These are the club’s top five performers in that span: Estee Lauder, Starbucks (SBUX), Humana (HUM), Bausch Health (BHC), and Costco Wholesale (COST). Note: This list does not include Coterra Energy (CTRA), which rose 163% in the 12 months following the midterm period in 2010. The company was known as Cabot Oil & Gas back then. In 2021, it rebranded as Coterra following a merger of equals with Cimarex Energy. The 2006 election S & P 500 rose 6.7% between November 7, 2006 and November 7, 2007. These 5 club names recorded the biggest gains during those 12 months: Apple (AAPL), Amazon, Wynn Resorts (WYNN), Nvidia and Google’s parent alphabet. The 2002 Election Over the past five midterm cycles, the S & P 500 posted its biggest 12-month gain between November 5, 2002 and November 6, 2003, up 14.9%. These are the best performing club holdings in that stretch: Amazon, AMD, Cisco Systems (CSCO), Humana and Wynn Resorts. Final Club Thoughts Only two club stocks outperformed the S&P 500 in each of the 12-month windows after a midterm election: Apple, which was the biggest winner in the 2006 cycle, and Honeywell ( HON ), which even thought it never broke even top five in an individual year-long span. Interestingly, there were five club stocks — Apple, Amazon, Honeywell, Costco and Estee Lauder — that were positive in the 12 months following the midterms in each of the past five election cycles. Finally, it’s also worth reminding everyone that results over a 12-month period following a specific event—in this case, a midterm election—are only a snapshot in time and don’t necessarily reflect how the company’s underlying business performed during the period. A wide range of factors – some specific to a company, others more macro – affect how a stock trades in the short term. But in the long run, the best companies tend to be rewarded by the market. (See here for a complete list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a share in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY ALONG WITH OUR DISCLAIMER. NO LIABILITY OR OBLIGATION IS OR WILL BE CREATED BY YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR DILUTION ARE GUARANTEED.
People walk past the New York Stock Exchange (NYSE) on Wall Street on July 12, 2022 in New York City.
Angela Weiss | AFP | Getty Images
Strange, but true: The S&P 500 has been solidly higher 12 months after the midterm elections in every cycle since 1954, according to Yardeni Research, regardless of which party won or lost. The broad market index’s average one-year gain in 17 post-election windows has been around 15%.