The 2015 Forecast: Another Year To Thrive

Third years of presidents' terms haven't gone negative since 1939.

This story appears in the January 19, 2015 issue of Forbes.

In 2015 expect an S&P 500 and global bull market extension of 15%-plus. Why?

On June 30 I detailed why fourth quarters in midterm election years were historically positive 86.4% of the time–because markets don’t discount the goodies in increased gridlock–and why that continues for the next two quarters, both also 86.4% positive, history’s most positive continuous three quarters extant. Believe it.

MORE: Interested in market analysis for your portfolio? Our latest Stock Market Outlook looks at key stock market drivers including market, political, and economic factors. 

Just so, third years of Presidents’ terms haven’t gone negative since 1939 and that was only -0.9% as Europe literally blew apart. Average third-year return? 18.5%. Excluding four single-digit years, the positives averaged 27.2%. Gridlock is great!

I make this prediction on the heels of a pretty accurate 2014. Last January professional forecasters clustered tightly around 6% return expectations. Since markets tend to do much better or worse when forecasts cluster, and since I wasn’t foreseeing worse, I expected better. Today that cluster sits at 8% (the highest, 14%, comes via Piper Jaffray). So expect higher still.

Last April I detailed why bull markets die in only two ways: running out of steam after climbing to the top of the wall of worry, or an emerging wallop of big badness that surprises everyone. In a $75 trillion global GDP, that wallop needs to be over $2 trillion in size. Could happen, but without such a cataclysm stocks bull on. Today’s sentiment is far from the euphoria in John Templeton’s great wall of worry depiction, which holds that “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.”

Europhobes are wrong again. No recession there, though most think there is or will be. I’ve previously laid out the power of the Conference Board Leading Economic Index to predict recession. Overall, Europe’s numbers are mildly positive. Ignore Italian and Greek problems–again.

More Market Commentary

Last Week In Markets: Feb 13 - 17, 2017

By Fisher Investments Editorial Staff

Bull Markets (INFOGRAPHIC)

By Fisher Investments Editorial Staff

cover image of the stock market outlook from fisher investments

Find out in the latest 2017 Q1 Stock Market Outlook where Fisher Investments reviews important market drivers that may impact your portfolio.

Get your free Stock Market Outlook   

Investors' Guide to the 2016 Presidential Election

The 2016 Presidential election is finally at a close, but what does all the sensationalism really mean for the stock market and your portfolio? Learn more in this free guide.

Read guide

Portfolio Management Services

services icon

Much like a tailor who alters the hem, sleeves, and collar of a suit to fit an individual's proportions, we take a variety of factors into account to create a portfolio carefully tailored to your needs.

Learn about our services
Learn about Fisher