Picking
the Best Months to Be in the Market
By Matt Blackman – Market
Analyst for
www.TradingEducation.com
We have
already examined the
best years
to be in the market. As we saw, the pre-election year
(year before each Presidential Election) beat the other
three years in the election cycle by a wide margin. Now,
let’s take a look at the best months to be in the market
comparing pre-election years with all years between 1902
and 2006.
How
does an upcoming election affect monthly Dow Jones
Industrial Average performance?
Average
versus Pre-Election Months
See
More...
Something Even Bigger than
the Election Cycle?
By Matt Blackman – Market
Analyst for
www.TradingEducation.com
While the election cycle
has exerted a significant force on stocks and markets,
here we examine a long-term cycle that has the potential
to wield an even more powerful and long-lasting impact.
There is little doubt that
the election cycle exerts one of the biggest influences
on the stock market, not only in the U.S. but around the
world. And as we have seen, it has an even greater
impact on commodity-based stock markets like the Toronto
Stock Exchange (TSX) because of the inflationary effect
pre-election pumping has had on commodities. However,
there is some evidence that there is an even more
powerful cycle affecting markets since the beginning of
the twentieth century and possibly further back than
that.
See
More...
Electionomics Evidence in
the Last Four Presidential Cycles
By Matt Blackman – Market
Analyst for
www.TradingEducation.com
Since
the beginning of the twentieth century, pre-election and
election years have greatly outperformed the
post-election and mid-term years. In fact, stock market
performance during the two years leading up to each
election versus the two years following works out to a
ratio of more than 3.5 to 1. Historically, the Dow has
experienced 77.56% of its gains in years three and four
compared to just 22.44% in years one and two of the
Presidential Cycle.
See
More...
Electionomics Report Card
How are we doing so far?
By
Matt Blackman – Market Analyst for
www.TradingEducation.com
Initially, the pre-election year got off to a great
start. Historically a time that has been good to
investors with money in stocks, the third-year has by
far outperformed the other three. But what started out
so well appears to have run into some trouble.
As
February came to a close, March lived up to expectation
coming in like a lion hungrily consuming returns as
markets around the world suffered downdrafts. How does
this compare to past cycles?
See
More...
Pre-Election Year Record
No losers in 68 years?
By Matt Blackman – Market
Analyst for
www.TradingEducation.com
We have
written about the success of the election cycle and how
well traders using the Electionomic Trader, a system
that got investors into the market for the two best
years of the four-year election cycle since 1833, would
have done. We have also discussed the impact the U.S.
election cycle has on a number of international markets
(see
http://www.electionomics.com/goesnorth.asp ).
Now
let’s focus on the best year of the four – the
pre-election year. Our backtests of the Dow Industrial
Average showed how the electionomic trader (being
invested for the two years leading up to each election)
would have fared
http://www.electionomics.com/graphs.asp. Individual
years are broken down at
http://www.electionomics.com/bestyears/ The results
speak for themselves.
But
here is another perspective on the best of the best –
the pre-election year. According to The Stock
Trader’s Almanac 2007, there hasn’t been a losing
pre-election year since 1939 when the Dow Industrial
Average lost 2.9%. The Dow has not had a losing
pre-election year in the 68 years!
See
More...
The
Electionomic Trader Goes North
Impact of the U.S. Presidential Cycle on the TSX
By Matt
Blackman
Like a
number of countries around the world, Canada has a
parliamentary system and elections do not occur at pre-set
times. A prime minister’s term can last longer than five
years or be as short as a few months. In the U.S. however,
a presidential term is fixed. Like clockwork presidential
elections have occurred every four years since the U.S.
became a nation.
This has
led to an interesting phenomenon. Since the first elections
more than 200 years ago, governments have learned that it is
not politically expedient to have voters go to the polls
under the cloud of a struggling economy with high
unemployment. Political parties have a far greater chance of
getting re-elected if their constituents are instead living
in prosperity. As a result governments generally tend to
make the tough decisions early in their administrations and
saving programs that stimulate the economy, as voters get
ready to head to the polls.
See
More...
Political Party Market Differences Throughout History
By Matt
Blackman
Since 1928
there have been a total of 10 Democratic Presidents and 9
Republican. Using the S&P500 as a gauge, during the average
Presidential term the index was basically flat for the first
two years of the term but then from the mid-term low in
September of the second year to the end of November in the
year of the election, the S&P closed gained slightly more
than 40% (see Chart 1).
During 10
Democratic terms, the index gained an average of 15% during
the first two years and then skyrocketed more than 40% in
the last two years of the term (see Chart 2).
See
More...
The Four-Year Election Cycle
Odds aren’t good for those who bet
against it.
By Matt Blackman
Since the first U.S. presidency in 1776,
the four-year election cycle has had a major influence on
the American economy. Every four years, there has been a
pattern that while never identical, has demonstrated
startling similarities.
Following each election, whether
incumbents or newcomers, winners are presented with the task
of getting their economic house in order. This often
includes correcting the excesses of previous
administrations, and this can mean making some painful
changes. Examples include addressing inflation concerns,
government spending and balancing budgets. It is also not
uncommon that in their zeal to right the economic situation,
governments overdo it, which is why many of the worst bear
markets in history have begun in post-election years.
Examples include 1929, 1937, 1957, 1969, 1973, 1981 and
2001.
See More...
