Inflation will be the ultimate influence on the U.S. midterm election: Greg Valliere
The Canadian stock market is set for a potential rally after the U.S. midterm elections, according Ken Fisher, founder, executive chairman and co-chief investment officer of Fisher Investments.
In a television interview Monday, Fisher said the nine-month window after a U.S. midterm election is historically the most profitable period for the Canadian stock market.
“The average return for those [nine months after a U.S. midterm election] is a little over 17 per cent. They've been positive 91 per cent of history,” Fisher said.
“There's never been a negative nine-month string in that sequence in the history of the TSX. Just stunning facts.”
Fisher explained that U.S. midterm elections typically produce political gridlock and controversial events are less likely to happen, which the market prices in.
There have only ever been two instances where the nine-month period after a U.S. midterm election did not achieve positive returns, Fisher said. One was at the start of the Second World War and another preceding the Great Depression.
Fisher added that he doesn’t think Canada’s high inflation rate will alter the historic trend of positive returns proceeding U.S. midterm elections. He said the current environment is similar to the 1966 bear market, which was also marked by high inflation and ended with a “midterm miracle.”
If equities climb after the U.S. midterm election that’s set to take place on Nov. 8, Fisher thinks technology and consumer discretionary stocks will perform particularly well.
For more, check out the full interview with Fisher.