Small Caps have historically outperformed during US election years

Small Caps have historically outperformed during US election years.

In fact, the $iShares Russell 2000 ETF(IWM)$ $E-mini Russell 2000 - main 2403(RTYmain)$ has outperformed the $S&P 500(.SPX)$ in 8 out of the last 10 election years. 👇

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Historically, valuations have risen during Fed easing cycles, with the $SPX P/E Ratio expanding by 2.1 points.

The last 3 easing cycles were different, however, with the $SPX P/E falling by an avg of 3.2 pts.

The key difference in the past 3 cycles was the starting point - the start-of-period P/Es in the last 3 cycles were the highest of all 10 cases.

For this cycle, 2024 is likely to have the 2nd highest P/E (1st ‘03) at the start of an easing cycle since 1966.

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6 of the past 10 Fed easing cycles have been positive for US stocks, while EPS fell in 9 out of 10.

The last 3 easing cycles have been negative for both stocks and SPX EPS.

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https://twitter.com/Marlin_Capital/status/1744874462728564818