No ballot box bounce
Don’t count on an election-year market bump in 2012, said Ben Levisohn in The Wall Street Journal. Even though investors have made money in 17 of the last 21 presidential election years, this presidential cycle is already atypical. The market’s best year of an election cycle is historically Year 3, when it has increased by an average of 17.5 percent. But last year, the S&P 500 remained essentially unchanged, after having risen by 26.5 percent in the first year of Obama’s presidency and by 15.1 percent in the second. What is different this time? Politicians often try to stimulate the economy in an election cycle’s third and fourth years to earn votes, but Washington’s partisan paralysis means “investors shouldn’t expect much stimulus anytime soon.” In light of continuing global uncertainty, expect market volatility instead.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Don’t fall for tobacco stocks
The tobacco industry’s good fortunes may soon go up in smoke, said Sandra Ward in Barron’s. The weak economy and rising cigarette taxes have put a crimp on sales, and “the number of young people taking up smoking has plummeted to the lowest level in a decade.” Investors have been drawn to Altria Group, the leading U.S. cigarette maker and owner of Marlboro, because of its 20 percent stock market rise last year and 5.5 percent dividend yield. But they should beware; the company is “clearly showing some stresses.” Beyond the demographic and regulatory pressures, Altria is carrying about $14 billion in debt. “For now, investors would do well to steer clear.”
