By Kevin Starkey and Ted Schwartz

Sell in May and go away for the summer this year? Maybe not, according to data compiled by our research partner Hidden Levers. In a recent study they conducted of Election Year markets, this year has gone amazingly well to the script for election years. Hidden Levers studied election years from 1926 thru 2011 and found the first 3 months of the year had positive average returns in the S&P 500 Index for each month. Check mark for 2012! The next two months have had negative average returns historically. Check mark for again for 2012! June has had a positive average return historically. You guessed it, check mark for 2012!


So, what does history tell us about the balance of the year? Historically, July and August are the two best months of election year returns.  Then, they are followed by a small negative in September and a small positive in October. Then, the certainty of Election Day sets in and we have a positive return in November and December.


This year has played to form perfectly so far. Can that continue through the balance of the year? It seems odd when this year and period seems so different from the norm, yet it has been so predictable year to date that we would not bet against returns continuing to approximate the norm over coming months.