If you’re invested in security and certainty, you are on the wrong planet.” – Pema Chödrön

During our Friday morning meeting in New York, Mark Newton, head of technical strategy, drew a fascinating comparison between this environment—one of the more treacherous we’ve seen—and that of 1962. It was President John F. Kennedy's second year in office; midterm years are historically a rough year for the stock market, and 1962 and 2022 are no outliers. Consider that from 1900 through 2021, the median annualized returns were:

• 12.7 percent in year 1

3.1 percent in year 2 (midterm year)

• 14.8 percent in year 3 (pre-election year) 

• 7.4 percent in year 4 (election year)

It's no surprise, then, that the Kennedy Slide of 1962 was marked by a 22.5% decline in the S&P 500 before it came roaring back higher. It’s also no surprise, then, that we’ve encountered declines in the first five months of 2022. A large chunk of our research is rooted in cycles, which makes these similarities noteworthy. The past is no indication of the future.

But there's reason to believe we will experience a similar year to 1962: choppy first half, strong second half, a view our research heads have held since the beginning of this year. They've believed the f...

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