Historically, the stock market just drifts the first half of presidential election years and then rallies strongly, as uncertainty about the election decreases.  That uncertainty usually begins to decrease well before the election.  It is irrelevant if a Republican or Democrat wins, as long as uncertainty about the election begins to decrease.

A few days ago, I wrote about the reasons for the strong, post-Brexit “melt-up” in stock prices.  Since then, I’ve become suspicious that the stock market has become convinced that it knows the winner in November and expects it to be Clinton.  If that is correct, there is every reason to believe the stock market will end the year higher.

Of course, don’t forget the Brexit election!  If the stock market gets surprised with a Trump win, it could repeat the frightening stock drop — but larger.  Hopefully, an unexpected post-Trump election win and resulting market drop would be followed by another post-Brexit rally like we have just seen.  Wouldn’t it be fun to ride that roller coaster again??