Source: Zhitong Finance "Since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%)." With the rebound of the stock market, the old adage "Sell in May and Go Away" seems to have been a bad advice once again. Last month, the S&P 500 index rose 4.8%, the best May performance since 2009. The NASDAQ 100 index rose nearly 6.2%, and the NASDAQ Composite Index rose 6.9%. Goldman Sachs FICC & Equities Trading Division said: "History doesn't really support this saying. Don't sell, leave the market (go on vacation), and enjoy the good times." The rising trend is still to be continued? If history is any guide, it may indicate that the rise of the stock market is not over yet. Looking ahead to the rest of 2024, Scott Rubner, Managing Director of the Goldman Sachs Global Markets Division and tactical expert, pointed out the following historical background for investors. Rubner stated that the S&P 500 index has risen 10.7% year-to-date, and since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%). "Since 1950, the median return of the last 7 months of each year (June 1 to December 31) is 5.4%. In the aforementioned 21 cases, the average performance of the last 7 months increased to 8.1%." Rubner added. Rubner also pointed out that the NASDAQ index has risen for 16 consecutive Julys, with an average return of about 4.64%.

In less than a month, the US presidential election is approaching, but Wall Street is surprisingly quiet, as so-called savvy investors are unwilling to bet on major events that are too close to happening. George Ball, head of the Houston-based investment firm Sanders Morris Harris, said: "Never bet on coin flip probability events. The election is too close, not allowing for thoughtful investment positioning."

It has been learned by China Fortune that according to Goldman Sachs' bulk brokerage data since 2008, hedge funds have not decreased their holdings of stocks as they did before the election. On the contrary, as the S&P 500 index continues to hit record highs, hedge funds have increased their exposure to stocks. Meanwhile, options traders are more focused on the Fed's rate cuts and the health of the US economy. Market veterans say that the November 5th election vote ranks low on the current priority list.

Chris Murphy, Co-Head of Derivatives Strategy at Susquehanna International Group, said: "Concerns about the election rank fifth, following concerns about Middle East conflicts, Chinese policy trends, US economic data, changes in Fed easing expectations, and the upcoming earnings season."

The latest poll from Real Clear Politics shows that Democrat Kamala Harris has a national support rate of 49.2%, while Republican Donald Trump has a support rate of 47.2%. However, under the electoral college system, the national average level is far less important than individual state polls, which basically show neck-and-neck competition. The likelihood of either party sweeping the presidency and both houses of Congress is considered very low.

Wall Street is still in a wait-and-see mode.

Apollo Wealth Management Chief Investment Officer Eric Sterner said: "First, this is a tightly contested presidential election, especially in swing states. Second, both candidates have very ambitious economic goals, and I believe that neither of them can fully achieve these campaign promises unless their party wins the White House and both houses of Congress."

Jonathan Capplis, CEO of hedge fund research firm PivotalPath, pointed out that hedge funds are taking a wait-and-see approach to the election, making major political investments only after the situation becomes clearer. So far this year, this approach has been effective. PivotalPath's data shows that as of the end of September, the return on US long/short hedge funds has reached 11%, ranking in the top 25% of nine-month rolling returns since 2010.

Capplis stated: "Most funds are more likely to favor continued market growth rather than significant cuts, as the outcome of the US election is still uncertain. Compared to the vague statements of the Trump or Harris campaign teams, the impact of Fed rate cuts on investments is much easier."

Meanwhile, compared to last year, the volatility of US stock options is relatively high, indicating that traders are taking a defensive stance. However, derivatives professionals say there is little evidence that this is mainly due to the elections. Instead, options trading is mainly driven by recent catalysts such as economic data reports, high volatility in the Asia market, and geopolitical tensions.

In addition, the increase in the volume of short-term options allows traders to wait longer to bet on specific events.

How can election trading be done?

Of course, this does not mean there is no way to trade the election now. However, portfolio managers and strategists recommend that investors focus on specific stocks and industries rather than broad indices.

UBS Group's trading department recommends regional bank stocks and wrote in a report to clients this week that it favors the so-called Trump trade is making a comeback. Republican governments are generally seen as favorable to industries with strict regulations such as finance and medical, while Trump's tough stance on trade and tariffs could bring trouble to the Asia-Pacific stock markets.

Energy is another popular election trade, with Trump's victory seen as favorable to traditional energy producers and a Harris win considered favorable to the clean energy industry. Goldman Sachs tracks two indices related to investments associated with Democratic and Republican victories, showing different industry reactions to the election campaigns.

Of course, there is one more way to invest, and that is to be patient. Some professional investors suggest that those planning to enter the market for the long term should not rush to believe rumors, but rather wait until the results are out and the situation is clear to position themselves according to all available information.

Caplan Capital Management portfolio manager Joseph Caplan said, "Long-term investors generally should avoid taking meaningful tactical actions before presidential elections, especially during highly competitive elections. Although certain industries may face greater headwinds or tailwinds during different government terms, there are ample reasons to avoid large portfolio adjustments."

Editor / jayden