Goldilocks Market - Watch out for the Bears.

Goldilocks is a term uttered often in stock market circles these days. Low inflation, low unemployment, low interest rates and solid growth. This has helped produce such a strong stock market. Much like children’s stories, such periods are typically short. Stay are on the lookout for the arriving bears and don’t get caught sleeping.

Typically, the Federal Reserve is quiet during an election year, so as to not be seen as political, and the party in power has an interest in keeping the economy strong. This leads to good stock market performance and presidential election years are better than average (+12.5% versus 10% all year) but volatility as higher as candidates argue policy and the market digests the implications. We will see what this year brings but given the country’s polarization it is likely to be even bouncier.