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The US Presidential Election Day is only few weeks away.
posted Oct 23 '16 by alex
The US Presidential Election Day is only few weeks away.

It is a big deal on the market, there are a lot of talks and debates going on before the election, but the closer this day the more uncertainty is in the air.

Stan Weinstein is saying that most important pattern on US market is "The Four-Year Presidential Cycle". In his book "Stan Weinstein's Secrets for Profiting in Bull and Bear Markets" ( http://www.amazon.com/gp/product/1556236832 ) the author is confirming that based on statistics for the last 100 years, the year following the election is usually a disaster, no matter who is elected.

"Historically, the probabilities are strong that in the second year the bear market will continue until a bottom is reached around mid-year (as occurred in August 1982). The rest of year two is bullish, and then the third year of the presidential term is the best one of the cycle. The fourth year, which is the election year, is a choppy one, with weakness usually occurring in the first half and strength in the second half."

Over the past 100 years, this four-year cycle has unfolded with such unbelievable regularity that it almost seems as if the politicians are writing a script.

Below is the chart for S&P 500 index for this century. Each presidential year is marked with vertical line and the pattern seems to work relatively well. Perhaps with the exception of the year 2012, when Barak Obama, as the incumbent president, secured the Democratic nomination with no serious opposition.

Will this year's election reinforce the stock market pattern?

I think we all agree that amount of uncertainty this year is unprecedented. Phil Town wrote a blog about the presidential election and the potential consequences either candidate could have on the market:

It's a great chance to think about how you want to address your investments.

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