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During the Dow Jones industrial average's 115-year history, there have been 19 years when a president ran for another term, Hirsch says. And in 14 of them, the Dow gained ground. And in three of the five years when the Dow dropped, he says, the losses were less than 5 percent.
Hirsch says usually if a president is doing a good job, the market rises during the re-election year. And if president is highly unpopular, Hirsch adds, the market rallies when he's voted out of office.
This year could be an exception. But market experts predict the S&P 500 index, a broad measure of U.S. stock performance, will gain 5 percent to 12 percent this year.
Granted, you want a diversified portfolio, but market experts say there are some areas you might want to emphasize:
U.S.A, U.S.A. This year, large U.S. companies are expected to outperform their international counterparts.
"U.S. stocks are cheap," McGee says.
Plus, analysts say, the economy here is better than many other places.
"It's not robust growth, but it's better than a lot of people give it credit for," says Brad Sorensen, Charles Schwab's director of market and sector analysis in Denver. "The jobless rate has come down. Jobless claims are at the lowest levels in a couple of years. Manufacturing continues to improve."
Among sectors, Mark Luschini, chief investment strategist with Janney Montgomery Scott in Pittsburgh, recommends health care and energy stocks. An aging population means demand for health care products and services will only rise. And the thirst for energy among emerging markets will continue, Luschini says.
The U.S. Supreme Court is expected to rule this year on a challenge to the health care law, including the mandate that consumers buy insurance. Shares of health care companies would rally if the mandate is shot down, Sorensen says.
But Warne, of Edward Jones, advises investors to rebalance their portfolio, which means putting more money into international stocks that performed poorly last year.
Dividend-paying stocks These have come into favor in recent years, and some investment experts are recommending them again. Mature companies that don't need every penny to fuel their growth tend to pay dividends. Their stock price likely won't skyrocket, but investors are rewarded with cash dividends.
"The dividends help people stay invested in times of volatility," Warne says. She advises looking for companies that have a long track record of raising dividends regularly.
Bonds The big threat a year ago was the prospect of rising interest rates that would pummel bond holders.
But rates not only remained low — they actually fell during the debt ceiling debate last summer when politicians took the country to the brink of default. Even as yields dropped, investors fled to the security of U.S. Treasuries. The yield on the 10-year Treasury has been running about 2 percent.
"Treasury yields are abysmally low," says Janney's Luschini.
For the risk-averse who seek a higher yield, he recommends high-quality corporate bonds that offer a yield of 3.5 to 4 percent.
And for investors who can handle more risk, he suggests high-yield or so-called junk bonds with an 8 percent to 9 percent yield. The default rate on these bonds is near historic lows, Luschini says, although a downturn in our economy could change that.
Bonds have had a strong run. Warne says long-term government bonds have outperformed stocks for the past one, three, five, 10, 20 and 30 years.
Historically, though, stocks outshine bonds. Some experts worry that investors might be holding too much in fixed income, and forget that bonds carry risks, too.
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