Trump vs. Harris... What the market is saying... The presidential election cycle... How to know the winner... The recession factor... Then comes the next four years...
 There's a big debate tonight, of course...
As we send out today's Digest, Donald Trump and Kamala Harris are about to meet onstage in Philadelphia for their first – and possibly only – presidential debate before November's election. Devoted readers might recall back in late June when we previewed the first debate between Trump and President Joe Biden. "Anything could happen," we said, for various reasons. It did. Nearly three months later, we're back... this time, with Harris on stage with Trump. Anything could still happen. Outside of a handful of brief appearances in front of reporters, it will be Harris' first major unscripted event since her vice-presidential debate against Mike Pence four years ago. In any case, we'll be watching – the high or lowlights, at least – and I (Corey McLaughlin) will report back tomorrow with significant economic or market-related points. In the meantime, you can send your thoughts to feedback@stansberryresearch.com, as usual. I'm also human and American, so like many of you, I will keep tabs on any "moments" that could shake up the race, too. Though as I will explain today, you might want to look at something else instead if you want to know who will win the White House. Short term vs. long term... During and after the debate (or any major news event, really), emotions will be stoked and analysis issued. You may see parts of the market reflect certain ideas about taxes or health care reform from either side. And you'll hear who everyone thinks won the debate and what that will mean for the presidential race. All of this may present trading opportunities. Our friend and Ten Stock Trader editor Greg Diamond is looking out to see if the debate turns out to be a catalyst in either direction for the market, though he told subscribers today he's not certain it will play out that way. (I'm personally interested to see how Harris' idea of price mandates for cereal and other foods plays tonight and afterward... or if that part of the economic agenda has gone into a dark place, never to be seen again.) But remember our frequent, perhaps disappointing view on the long-term impact of presidential elections on the market. Over time, the outcome of the election tends to matter less and less than the dates on the calendar – and than what the market is saying. Since I started working at Stansberry Research, I've learned a few big things about the market and presidential election years. I've also written the Digest through an entire cycle, and I've been fortunate to learn from all the bright minds on our team. Firstly... Respect the presidential election cycle... History has clearly shown that a "presidential election cycle" pattern exists over a century of market history, for each of the four years in the cycle. You can debate the "why," but the history is there. Broadly speaking, as our colleague and True Wealth editor Brett Eversole wrote a couple years ago... Stocks perform OK during a president's first year in office. Then, in the second year, they go through a major slump. That's when the worst returns show up. Many believe this happens because of the uncertainty around midterm elections. After the midterms, certainty returns to the markets... and Year 3 leads to the biggest returns. Year 4 is also usually another solid year as we head into the next presidential election. The pattern is more or less playing out again this year. The S&P 500 Index's average return in presidential election years is around 11%, and stocks finished higher roughly three-quarters of the time. The S&P 500 is up roughly 15% in 2024. And with concerns and uncertainties about the economy (and politics) ahead with rising unemployment (at least if you're reading our work), perhaps more of a trim is due before year end. More than anything else, the market tends to predict the election winner... Most people look at the stock market and try to think about which will be the "winning" companies or sectors if a certain candidate wins the White House or one party or the other controls Congress. It's true that some parts of the economy may benefit from the specific policies of Democrats or Republicans. And there may be trades to be made around the likelihood of either side winning in the short term. But that's not the most telling information to consider. I'm not going to sit here and predict November's election result with any certainty. Whoever wins, we will end up with more debt as a nation. We will want to own inflation protection, like shares of high-quality stocks and other assets that can't be printed because Congress or a central banker says so. We will sleep easier that way. If you need to scratch an election-prediction itch, though, the more reliable thing to do is to look at what the market is doing before a presidential election to see who will win the election. In brief, if the stock market is up from July 31 to October 31, the incumbent party's candidate generally wins. When the market is down, it's a more likely victory for the challenger. It's not a perfect predictor, but the evidence is pretty compelling. We last discussed this in July, just before this indicator was about to get going... In the 23 presidential elections since 1928, 14 were preceded by gains in the three months prior. In 12 of those 14 instances, the incumbent (or the incumbent party) won the White House. Conversely, in eight of the nine elections preceded by three months of stock market losses, incumbents were sent packing. This was the case in 2020, by the most razor-thin of margins. From July 31, 2020, to October 31, the S&P 500 lost a slim 0.04%. And, perhaps appropriately, the election result was slim in Biden's favor (and contested by Trump). In any case, this indicator was again "right" about the election result, as it has been about every one since 1984. Today, many polls – and believe them as much or as little as you'd like – have Harris and Trump neck and neck to win November's election. So does the market. Since July 31, the S&P 500 is nearly flat, down roughly half a percent. The benchmark index was up slightly, 0.4%, today. Pay attention to how the market performs over the next two months if you want to predict who might win come November. And don't forget about one more feature of election season... The 'recession factor' is strong... Since 1932, the incumbent or incumbent party has never failed to win reelection unless a recession has occurred during his time in office. That's also what we had in 2020, albeit briefly amid the COVID-19 panic. This makes some sense because if voters are upset with the economy, they want change. Whether that change works or is "right" is another story. In most cases, the answer is simply "more spending" and inflation and debt, but we digress... Today, the unemployment rate has been generally trending higher since April 2023, up to 4.2%. We're seeing various recession indicators flash (the Sahm Rule and an uninverting yield curve). The Federal Reserve is signaling it will cut interest rates. Defensive sectors of the market, like consumer staples, have become the leaders. It looks like pre-recession or early-stage-recession market behavior. Yet while the economy may indeed be weakening as we speak – and job creation is dwindling – it's unlikely right now you'll hear an "official" recession declaration before Election Day. That's not a conspiracy theory, on the surface at least, but a matter of timing. The job market may be weakening, but the other part of the "recession" equation, GDP, is still holding up. (Of course, government spending plays a role, but we play the cards we are dealt here.) Estimates for the current (third) quarter still call for GDP growth in the 2% range. But if GDP growth turns negative by the end of the quarter, folks won't wait around to talk about a recession. The first third-quarter GDP estimate is due on October 30. Wouldn't that be some timing, a week before people head to the polls? Otherwise, though, any further economic weakness isn't likely to come to light until after the election. Then we'll deal with the next four years.
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New 52-week highs (as of 9/9/24): American Financial (AFG), Altius Renewable Royalties (ARR.TO), Clorox (CLX), Compass (COMP), Direxion Daily Real Estate Bull 3X Shares (DRN), JPMorgan Chase – Series LL (JPMPRL), Kenvue (KVUE), Lockheed Martin (LMT), London Stock Exchange Group (LNSTY), NYLI CBRE Global Infrastructure Megatrends Term Fund (MEGI), Northrop Grumman (NOC), Pembina Pipeline (PBA), Procter & Gamble (PG), ResMed (RMD), iShares 1-3 Year Treasury Bond Fund (SHY), Stryker (SYK), Travelers (TRV), Vanguard Short-Term Inflation-Protected Securities (VTIP), Consumer Staples Select Sector SPDR Fund (XLP), and the short position in SolarEdge Technologies (SEDG). A quiet mailbag for today. As always, send your comments, questions, concerns, suggestions, gripes, praise, rage, etc., to feedback@stansberryresearch.com. All the best, Corey McLaughlin
Baltimore, Maryland
September 10, 2024
Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open stock positions across all Stansberry Research portfolios. Returns represent the total return from the initial recommendation. | Investment | Buy Date | Return | Publication | Analyst | MSFT
Microsoft | 11/11/10 | 1,347.5% | Retirement Millionaire | Doc | MSFT
Microsoft | 02/10/12 | 1,292.9% | Stansberry's Investment Advisory | Porter | ADP
Automatic Data Processing | 10/09/08 | 994.3% | Extreme Value | Ferris | WRB
W.R. Berkley | 03/16/12 | 820.7% | Stansberry's Investment Advisory | Porter | BRK.B
Berkshire Hathaway | 04/01/09 | 714.9% | Retirement Millionaire | Doc | HSY
Hershey | 12/07/07 | 505.8% | Stansberry's Investment Advisory | Porter | AFG
American Financial | 10/12/12 | 472.9% | Stansberry's Investment Advisory | Porter | TT
Trane Technologies | 04/12/18 | 452.9% | Retirement Millionaire | Doc | TTD
The Trade Desk | 10/17/19 | 378.6% | Stansberry Innovations Report | Engel | NVO
Novo Nordisk | 12/05/19 | 378.6% | Stansberry's Investment Advisory | Gula | Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any Stansberry Research publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio.
| Top 10 Totals | | 5 | Stansberry's Investment Advisory | Porter/Gula | | 3 | Retirement Millionaire | Doc | | 1 | Extreme Value | Ferris | | 1 | Stansberry Innovations Report | Engel |
Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio | Investment | Buy Date | Return | Publication | Analyst | wstETH
Wrapped Staked Ethereum | 12/07/18 | 2,291.8% | Crypto Capital | Wade | BTC/USD
Bitcoin | 11/27/18 | 1,417.9% | Crypto Capital | Wade | ONE/USD
Harmony | 12/16/19 | 1,124.6% | Crypto Capital | Wade | MATIC/USD
Polygon | 02/25/21 | 721.2% | Crypto Capital | Wade | OPN
OPEN Ticketing Ecosystem | 02/21/23 | 279.3% | Crypto Capital | Wade | Please note: Securities appearing in the Top 5 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the Crypto Capital model portfolio. The buy date reflects when the recommendation was made, and the return shows its performance since that date. To learn if it's still a recommended buy today, you must be a subscriber and refer to the most recent portfolio.
Stansberry Research Hall of Fame Top 10 all-time, highest-returning closed positions across all Stansberry portfolios | Investment | Symbol | Duration | Gain | Publication | Analyst | | Nvidia^* | NVDA | 5.96 years | 1,466% | Venture Tech. | Lashmet | | Microsoft^ | MSFT | 12.74 years | 1,185% | Retirement Millionaire | Doc | | Inovio Pharma.^ | INO | 1.01 years | 1,139% | Venture Tech. | Lashmet | | Seabridge Gold^ | SA | 4.20 years | 995% | Sjug Conf. | Sjuggerud | | Nvidia^* | NVDA | 4.12 years | 777% | Venture Tech. | Lashmet | | Intellia Therapeutics | NTLA | 1.95 years | 775% | Amer. Moonshots | Root | | Rite Aid 8.5% bond | | 4.97 years | 773% | True Income | Williams | | PNC Warrants | PNC-WS | 6.16 years | 706% | True Wealth Systems | Sjuggerud | | Maxar Technologies^ | MAXR | 1.90 years | 691% | Venture Tech. | Lashmet | | Silvergate Capital | SI | 1.95 years | 681% | Amer. Moonshots | Root | ^ These gains occurred with a partial position in the respective stocks.
* The two partial positions in Nvidia were part of a single recommendation. Editor Dave Lashmet closed the first leg of the position in November 2016 for a gain of about 108%. Then, he closed the second leg in July 2020 for a 777% return. And finally, in May 2022, he booked a 1,466% return on the final leg. Subscribers who followed his advice on Nvidia could've recorded a total weighted average gain of more than 600%.
Stansberry Research Crypto Hall of Fame Top 5 highest-returning closed positions in the Crypto Capital model portfolio | Investment | Symbol | Duration | Gain | Publication | Analyst | | Band Protocol | BAND/USD | 0.31 years | 1,169% | Crypto Capital | Wade | | Terra | LUNA/USD | 0.41 years | 1,166% | Crypto Capital | Wade | | Polymesh | POLYX/USD | 3.84 years | 1,157% | Crypto Capital | Wade | | Frontier | FRONT/USD | 0.09 years | 979% | Crypto Capital | Wade | | Binance Coin | BNB/USD | 1.78 years | 963% | Crypto Capital | Wade | | 
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