The Presidential election cycle tends to see markets bottom in the 2nd year of a Presidency, and peak in the 4th. It held true in 2002, where the markets bottomed on October.

Presidential Election Cycle Gains
spx_presidential_cycle.bmp
Source: ChartoftheDay.com

The cycle predicts that the market will peak this year. Note that we are still below the average percentage gain since 1950. While this is not conclusive, it suggests there is still room left to run.

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Quote of the Day:
“If you are partial to car crashes, train wrecks, wrestling matches and bloodshed, this will be a fun time.” -Norman Ornstein, American Enterprise Institute

UPDATE: Emails have made it clear I should put the Quote of the Day into context: Ornstein is referring to the present congressional budget, and the negotiation/battle attached to it. That quote is from the opening paragraph of his commentary, Cutting Discretionary Spending Alone Just Won’t Work

Category: Finance

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One Response to “Chart of the Week: Presidential Election Cycle Gains”

  1. Mats says:

    The mid-elec year-low to pre-elec year high returns doesn’t strike one as that high. What does a year-low to the second next year’s high use to yield anyway?