On Monday, President Trump took his oath of office for the second time.

The event split our country in half once again. Half celebrated, and half mourned.

Regardless of what camp you fell into, it's crucial to remember one thing: Mixing your politics with investing is a terrible idea.

You can't sell everything just because you hate whoever is in office. And you can't blindly buy just because your candidate won.

The truth is that markets tend not to care which party is in power. It's not that the choice of president doesn't matter... But it matters much less to stocks than you probably expect.

There's something about a new presidency that really matters though. It restarts the clock on the election cycle... a market pattern with nearly a century of data behind it.

We just started Year 1 of the election cycle. As I'll share today, this is the new "best year" for stocks... And it points to another double-digit rally in 2025.

The president might not matter much to the markets. But where we are in their presidency is crucial.

In other words, markets care about when, not about who.

We call this phenomenon the election-cycle indicator. It's logically founded and well known in the investment community. Here's how it goes...

Presidents spend their first year on their most ambitious policy ideas. This is when they swing for the fences... And that means they tend to ignore the economy and markets.

However, after midterm elections, the president begins to focus on reelection. The best way to get yourself or your party reelected is to improve the economy. And that improvement ends up driving markets higher.

This cycle means the first two years of a presidency tend to be the worst for stocks. The third is by far the best, and the fourth is second best.

The data backs this up. Here's how the election cycle has played out in the S&P 500 Index since 1928...

There's a clear pattern here. Year 1 is OK. Year 2 stinks. Year 3 is far and away the best. And Year 4 is a solid second place.

You've probably read about this cycle over the years. It matters. And normally, entering Year 1 isn't something we'd note as bullish for stocks.

Here's something you might not realize, though... The election cycle has shifted over time.

Over the past 10 election cycles, the third year hasn't been the only one that counts. In fact, Year 1 has become the biggest winner. Here's the data since 1984...

Since 1984, years 2, 3, and 4 haven't changed much. But Year 1 has seen a stark improvement.

It's now the most profitable year of the election cycle, with a typical gain of 17.2%. Plus, the market ended higher in the first year 90% of the time... And we saw a 20%-plus gain in six of the 10 cases.

That's a stellar result, with consistently high returns. Plus, it's a massive change compared with history. The next question is, why?

It could be that presidents now spend more energy on the economy early on... Or maybe as political gridlock has increased, new presidents are less effective in their first year. Markets like gridlock – it means less uncertainty.

In any case, the shift that has taken place is clear. Year 1 of the election cycle is the new "best year" for stocks... And that's where we are now.

Most investors are still looking for reasons to sell. But the smarter call is to be bullish today. And this is one more reason to expect good things for stocks in 2025.

Good investing,

Brett Eversole