Billionaire investor Ken Fisher calls it the “midterm miracle.” He says that since 1925, the S&P 500 Index (^SPX) has delivered positive returns in 84% of fourth quarters during midterm election years. But for investors interested in profitable smaller businesses, I’d examine the State Street SPDR Portfolio S&P 600 Small Cap ETF (SPSM), advises Nicholas Vardy, editor of The Global Guru.
The first and second quarters of the following year have each been positive 88% of the time, too. But here’s the statistic that really caught my attention. Taken together, those three quarters have produced positive returns in 91% of historical midterm cycles, averaging a gain of 19.8%. And Fisher reports that this nine-month stretch hasn’t delivered a negative return since the Great Depression.
State Street SPDR Portfolio S&P 600 Small Cap ETF (SPSM)
Think about that. Despite wars, recessions, financial crises, and political upheaval, this particular window has displayed an extraordinary historical tendency toward rising stock prices.
So, how should investors position themselves? With SPSM! Unlike the broader Russell 2000, the S&P SmallCap 600 applies an earnings-based eligibility screen. That doesn’t eliminate risk. But it offers a different way to participate in a potential small-cap recovery.
Recommended Action: Buy SPSM.
