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George Putnam, one of the country's leading turnaround and distressed investing professionals, shares his timely insight on the economy and turnaround investing opportunities.

Whither this Election Year Market?

Excerpted from the May 2012 Issue

May 24, 2012

As political posturing and rhetoric continues to escalate, most of us are wondering about the election’s potential impact on our investments.

Historically, the stock market generally does well in a presidential election year. The S&P has risen in 12 of the 15 presidential election years since 1952. However, the trend has been less clear in recent election years, with stocks showing significant losses in 2000 and 2008. While election year results have generally been good, the best returns have typically come in the year before the election year—on average more than double the annual return rates seen in each of the other three years.

Much has also been made of how each candidate—and his respective party’s philosophies—will impact Wall Street. History shows us that the market has tended to respond more favorably to a Republican victory in past elections. In short, although there is some logic to the presidential cycle, you shouldn’t be trying to time the stock market—in an election year or any other time. Read more historic election year statistics.

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George Putnam's Favorite Stocks for 2016

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Comparing Stocks and Bonds

While the common stock of a turnaround candidate usually has the greatest upside potential, other classes of securities, such as bonds or preferred stock, may offer attractive profit possibilities with less risk. Read More.

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Banking on a Financial Sector Turnaround

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MoneyShow.com recently tapped George's favorable opinion for a banking industry rebound. In "Turnaround Expert's Banking Bets," Steve Halpern highlights a trio of Putnam's top stock picks from the battered financial sector.

 

George reminds value investors: "Fortunately, many of the factors...just aren't present in the market, and the other reason that investors seem to be down on the banks is they sort of expected the Fed to raise interest rates a little faster than they have. And the banks do better when interest rates are rising because they have wider margins on their loans, but I think the Fed will gradually raise rates to we will see profits improve, and so I think this downturn is really temporary."

 

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