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Posted By Barry Ritholtz On September 11, 2005 @ 11:00 am In Markets,Technical Analysis | Comments Disabled
This weeks Barron’s  has an interesting chart from Sy Harding. If you are unfamiliar with Harding’s work, have a look at his prescient 1999 book, “Riding the Bear: How to Prosper in the Coming Bear Market .” (Spend the $1.49 on used copy — its well worth it).
Harding suggests that:
“UNLESS I’M LOOKING AT the wrong calendar, stocks are headed for a rough patch next year. That’s because 2006 is the second year of a presidential term, and the market historically hits a significant low in those years.
The trend has been strongest in long-term, or secular, bear markets,
such as the period of 1965 through 1982. But the pattern has been clear through bull and bear periods alike — and through war and peace, rising and falling interest rates, high and low inflation — regardless of which party was in power.”
In the past, I wondered if the 2nd year low held up for two term Presidents. Harding assures us it does: ” This has been true even for second-term presidents like George Bush. After all, they want their party to remain in power.”
I found the numerical equivalent of this some years ago, and posted it in the Mid-term Presidential Election cycle :
This is consistent with my prior expectation that my most likely scenario, where the markets top out in December, and then head south in ’06.
It’s the Cycle, Stupid! 
Barron’s, Saturday, September 10, 2005
Article printed from The Big Picture: http://www.ritholtz.com/blog
URL to article: http://www.ritholtz.com/blog/2005/09/presidential-cycles/
URLs in this post:
 Barron’s: http://online.barrons.com/article/SB112631643546337049.html
 Riding the Bear: How to Prosper in the Coming Bear Market: http://www.amazon.com/exec/obidos/ASIN/1580621546/thebigpictu09-20
 Mid-term Presidential Election cycle: http://bigpicture.typepad.com/comments/2002/09/
 4 Year Cycle: http://bigpicture.typepad.com/comments/2004/03/4_year_cycle.html
 Image: http://www.ritholtz.com/blog/wp-content/uploads/2005/09/sy_harding_09092005_.gif
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