2025 tracking nicely the first year progression of the U.S. presidential election cycle
The Sandbox Daily (3.5.2025)
Welcome, Sandbox friends.
Today’s Daily discusses:
first year progression of the U.S. presidential election cycle
Let’s dig in.
Blake
Markets in review
EQUITIES: Nasdaq 100 +1.36% | Dow +1.14% | S&P 500 +1.12% | Russell 2000 +1.02%
FIXED INCOME: Barclays Agg Bond -0.34% | High Yield +0.05% | 2yr UST 4.007% | 10yr UST 4.281%
COMMODITIES: Brent Crude -2.27% to $69.43/barrel. Gold +0.29% to $2,929.1/oz.
BITCOIN: +3.07% to $90,090
US DOLLAR INDEX: -1.35% to 104.313
CBOE TOTAL PUT/CALL RATIO: 0.91
VIX: -6.72% to 21.93
Quote of the day
“The music is not in the notes, but in the silence between.”
- Mozart
First year of the U.S. presidential election cycle
Historically, the first year of a U.S. presidential cycle tends to undergo sideways, range-bound consolidation before lifting higher throughout the remainder of the year.
The recent increase in policy uncertainty and concerns over tariff risks has engrossed markets with fear, as the S&P 500 finally conceded the last of its gains since President Trump’s election. On Tuesday night, Trump addressed a joint session of Congress and acknowledged the change in the administration’s policies would cause “a little disturbance,” while the viewers at home nodded in synchronicity.
The chart below highlights the average progression for several major indices during the first year of a U.S. presidential cycle.
2025 seems to be following the historical pattern in spades. Strong post-election market response, new year early jitters.
The volatility could remain relatively high throughout 2025 as the economy works through the changing of the guard at 1600 Pennsylvania Avenue and the dizzying pace of new executive orders.
The chart below breaks down the average annual returns and maximum drawdowns observed within the first year of a presidential cycle.
Historically, annual returns have averaged +6.6% for the S&P 500 index, with average maximum drawdowns within the year of -16.3%. Both around historical norms for any calendar year.
The largest drawdown of -45.5% – which Ray Dalio frequently reminds us – was observed in 1937.
Forward returns are quite compelling during election years following a correction.
After a maximum drawdown was observed, the index posted an average positive gain of 12.8% over the following 6-months and 12.6% gains over 12-months.
Source: All Star Charts, Piper Sandler, ThomsonOne
That’s all for today.
Blake
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Welcome to The Sandbox Daily, a daily curation of relevant research at the intersection of markets, economics, and lifestyle. We are committed to delivering high-quality and timely content to help investors make sense of capital markets.
Blake Millard is the Director of Investments at Sandbox Financial Partners, a Registered Investment Advisor. All opinions expressed here are solely his opinion and do not express or reflect the opinion of Sandbox Financial Partners. This Substack channel is for informational purposes only and should not be construed as investment advice. The information and opinions provided within should not be taken as specific advice on the merits of any investment decision by the reader. Investors should conduct their own due diligence regarding the prospects of any security discussed herein based on such investors’ own review of publicly available information. Clients of Sandbox Financial Partners may maintain positions in the markets, indexes, corporations, and/or securities discussed within The Sandbox Daily. Any projections, market outlooks, or estimates stated here are forward looking statements and are inherently unreliable; they are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.
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Fantastic insights here.