Sy Harding (who you may know from his prescient 1999 book Riding the Bear) had an interesting piece in Barron’s over the weekend.

Sy wrote:

There’s a strong tendency for each new presidential administration to do whatever it takes to make sure the economy and market will be strong when reelection time rolls around four years later. As the table below shows, of the 19 bear markets since 1917 — I define a bear market as one in which stocks fall at least 20% — 15 ended in the first or second year of a presidential term, so that the economy and stock prices had recovered by the time the next election took place. . . .

The sole president who didn’t see the bear depart until his fourth year in office was the unfortunate Herbert Hoover, who wasn’t re-elected. So, the odds seem good that the current bear market will conclude in the first or second year of the Obama presidency.”

15 of 19 seems like not bad odds, and if you look at the last 4 — 3 of them came during a president’s second term.

Statistically speaking, 2010 looks like a pretty good bet for the end of the Bear market, according to Harding. One caveat: Just because the Bear ends doesn’t mean a new bull starts right away.

My 1973 thesis is still playing out according to schedule, which puts us now somewhere in 1974. Even when the bear was dead, markets still needed another 7 years for a new bull to begin . . .




Thank You, Mr. Obama
Barron’s April 25, 2009

Category: Markets, Politics, Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

65 Responses to “Markets During Presidential First Terms”

  1. DL says:

    Given the massive manipulation of the economy and stock market already, I would expect the four-year cycle to be even more true this time than usual.

    The one caveat is that, given the massive fiscal and monetary stimulus in the pipeline, the possibility exists that the economy will peak too soon, and the Fed will have to tighten monetary policy aggressively before the next election.

  2. DL says:

    Harding also states the following in his article:

    “…the bottom could be seen in 2009, perhaps in October, after a retest of the March low”.

    So, bears, don’t despair. There may be another chance to get out.

  3. CNBC Sucks says:

    DL, the can has been kicked. Why tease the poor readers of this blog?

  4. Marcus Aurelius says:

    Conspicuous In his absence from the list (counting only Presidents who held office during my lifetime — Eisenhower – Obama), is Bill Clinton. No 20% drop in the market in 2 terms. In light of the regularity of this level of economic contraction in the markets, that is an impressive achievement (assuming that the Presidency is influential over the cycle in the first place).

  5. Mannwich says:

    Let’s face it – George H.W. Bush was the bagholder for Reagan’s manipulations of the economy (running high deficits). George W. Bush was the bagholder for Clinton’s ( but Greenie 9/11, and Iraq rescued W for a second term. O is the bagholder for W’s machinations of the economy. Who will be the bagholder for O’s machinations? Answer: Probably all of us.

  6. DL says:

    Despite all of the hoopla from the bulls, the S&P has still not managed to close above that all-important 875 level. I thought for sure it would happen today, but maybe not.

  7. karen says:

    my internet has been intermittent all morning but i’ve just fixed the problem.. so i didn’t have to kill myself, but i did miss the 15 pt spx drop…

  8. DL says:

    karen @ 1:09

    How did you manage to survive before the internet… and without a TV, to boot?

  9. Stillaway says:

    Re: Leftback Bottom™ at SPX 666
    Is it the Leftback Top at SPX 888?

  10. karen says:

    quote from bespoke: “The S&P 500 has today broken above the 879 resistance level that has been holding it back over the last couple of weeks. After being down 26% year to date in early March, the S&P 500 has made a strong comeback and is now down just 1.91% year to date. Since the March 9th low, the index is now up 33%. The next level of resistance is between 903 and 908, which is the 2008 closing level and a place where two peaks occurred late last year.”

    dl, being a mother of two young boys kept me busy… i was a runner and spent more time in the ocean during my free time. i also read more novels.. but the markets have been far more entertaining than books or movies..

  11. karen says:

    1 guess as to whom stillaway is.

  12. A quick glance at the chart, with declines all exceeding 20%, and in one case reaching nearly 90%, and one thing, if nothing else, is clear: Stock prices are incredibly volatile. The lesson: Don’t play with money you might need to soon get back.

  13. Mannwich says:

    Ah, ha, Stillaway = Mr. leftback. We’re far too smart here at TBP for that ruse. Well, maybe not.

  14. call me ahab says:


    HAHAHAHAHA- seems you can’t stay away stillaway- I like the 888- hope you’re right

  15. I-Man says:

    @ Karen:

    Although I love the boys at bespoke… a bit early to call that “The S&P 500 has today broken above the 879 resistance level that has been holding it back over the last couple of weeks.”

    They call that a break above resistance??? Looks a little chickenshit to my rasta eyes… More like
    “A peek above resistance on crappy volume.”

    Just calling like I see it…

  16. Bob_in_MA says:

    Is Barry seriously comparing this to 1974? Um, ever heard of inflation and debt levels?

    I posted this earlier at CR:
    This to me has been the fallacy of the comparisons to the 1970s. This time, both corporate and household assets have suffered severe deflation.

    From FOF, B.102, line 1, Assets of Nonfinacial Corporations, $B:
    1973: $2,057
    1974: $2,432
    1975: $2,764
    From FOF, B.101, line 1, Assets of Households, $B:
    1973: $5,135
    1974: $5,222
    1975: $5,902

    During an incredibly sharp downturn, Assets of nonfinacial corporations rose 33%! For households it was 15+%.The opposite extreme of what’s happened in this recession. Another big difference is the big difference in debt levels for both groups at the beginning of the recession.

    Tyler Durden (I know, he’s a bit over-the-top sometimes) has a post comparing now to 1982 that has a great chart:

    Debt levels per GDP for ALL categories were much, much lower, and in 1974-75 debt levels were lower still.

    So in 1974-75 debt levels per GDP of households, and all businesses, and servicing costs, were much lower, and the assets backing the debt was rising in value at annual rates of 8-11%.
    While now, debt levels are 50% higher and the assets backing them are falling at annual rates of 7-15%.

    Everyone remembers how horrible inflation was in the 1970s, but they forget how much it cushioned over-extended debtors.

  17. Stillaway says:

    Actually I’ve been lurking here ever since the Barron’s interview with BR.
    I’ve chuckled at the many references to the Leftback Bottom™ and couldn’t resist posting when the SPX blew off at 888.

  18. cjcpa says:

    …I’ll be away for a few days?

    = stillaway?

    too tangential for that thing I call conviction, or certainty….

  19. karen says:

    Stillaway, LOL. It was so perfectly him, too. I remember that Barron’s interview… did you see the comment from BR at the time that the interview occurred a month or more before they published it?

  20. wally says:

    Interesting stats, but incomplete.
    What is missing is an accounting of why a particular President happended to come into office during the bear. Typically, this would be due to a perceived failure by his predecessor.
    In other words: do party changes happen more often during bulls or bears? And does this change automatically set the newcomer up for success, deaserved or not?

  21. Mannwich says:

    On another note – two more people that I know got laid off in recent days. One just had a major stroke over a year ago and was still recovering. Pretty cutthroat. I can only imagine what her medical bills will be going forward. She works for one of the TV news stations here. I’d be lining up an attorney, pronto, if I were her. Sure, this economy is just fantastic. Beats expectations every day.

  22. CNBC Sucks says:

    In the U.S., job losses and economic misery have nothing to do with asset prices. Next time you want to know what stock prices will be, just ask Tim Geithner and Ben Bernanke what they would like it to be. With your money, they can buy a recovery. You are already paying for it so enjoy it.

  23. karen says:

    Stillaway, please don’t stayaway. U are too much fun! But look at the spx, nothing broken.. i bet we close above 875 today. Andy called it “a grind up to 900.” I was just earlier to see it and accept it than most of the bears that come to this klatch.

  24. karen says:

    BTW, Macro Man likened today to star wars, not the matrix…

  25. Gavshire Hathaway says:

    Hey Karen, out of curiosity, do you have any fundamental reason why the market should keep rising? Or is it simply technical analysis, and the expectation that we can keep kicking the can down the road, finding a greater fool, and extending a ponzi scheme?


  26. Mannwich says:

    It’s getting pretty close to late day pump time. Here we go.

  27. whew…did y’all catch that? Stocks got all the way to the red, falling about a percent from their intra-day highs, before some buyers magically appeared to cushion the blow. The beat goes on….

  28. CNBC Sucks says:

    Ritholtz, I hope your book goes out soon because The Larry Kudlow Economy is in full reflationary recovery mode and the mass of the American people — most of whom did not know or did not care about the bailouts, because they were not mentioned on American Idol — will not have a clue what the hubbub of your book is all about. By the time Bailout Nation is on the shelves, and you are on your book tour, most Americans will be too busy living beyond their means again to pay attention. The only people who will care about Bailout Nation are those enlightened but unfortunate members of the U-6 Nation who will “browse” it everyday at the local Borders during the upcoming jobless recovery.

    But thanks for the page views, buddy!

  29. hopeImwrong says:

    Seems like we are moving up to a big move in the market. It feels like it’s ready to blow.

  30. karen says:

    Gavshire, a combination of factors that required me to suppress my bias to the downside… first and foremost were the charts and the belief that equities aren’t based on fundamentals but perceived values (and currency fluctuations!).. secondly, i’m in the inflation or reflation camp… i believe the world is awash in fiat currencies and it’s a matter of following the money. Third, I feel the markets fell too far too fast… mass liquidations and margin calls… unprecedented de-leveraging. I’m posting too much so I’ll direct you to a great read from Todd Harrison:

  31. Gavshire Hathaway says:

    Thanks Karen,

    I think it is very interesting, as the very worst companies are leading this rally. Serious dogs like SPG, SHLD, WFC, VNO, Insurers, consumer discretionary. These companies are not only extraordinarily overvalued, they are likely to end up bankrupt.

    For me to believe that the inflation or reflation camp can possibly be correct, I have to believe that there is enough future wealth in this country to meet the expectations of its people. Put simply, I find this highly unlikely. So regardless of whether stocks appreciate in nominal terms, the misery index is going to rise significantly from here. The correct investment IMO is either to bet on inflation and hoard commodities/gold, or to short equities.

  32. DL says:

    I don’t care if this rally goes all the way to 1200 without a 5% correction. I would STILL bet on partial retracement of the rally, at least to the extent of 50%.

  33. MRegan says:

    WRT Barry’s thesis: “My 1973 thesis is still playing out according to schedule, which puts us now somewhere in 1974. Even when the bear was dead, markets still needed another 7 years for a new bull to begin . . .”
    Does this mean that the best thing to do is accumulation? Dedicate the next seven years to building large positions in companies like MMM? Or P&G? Or just go S&P? Buy on the dips? Put off instant gratification in order to reap greater benefits in 2016? (if’n we make it thru 2012)

    Here’s an OT: Lula da Silva(Brasil) and Garcia(Peru) met a few days ago in Rio Branco and Garcia announced that their intention was to have commercial transactions settled in reais within 60 days (likely not possible) and to eliminate the need for an intermediary currency (USD). Yeah, I know, who cares? Nothing ever happens on the margins, right?

    Wonder how they are going to engineer the MB expansion in Brasil…did I hear somebody say um milhão de casas! nenhuma delas senzala, nao

    Wasn’t some nut on this blog talking about GAFISA (GFA) awhile ago? Yeah, now I remember, oops too late up 80% since then…freakin’ heck maybe y’all need to stop choking kojak and do sum thinkin’.
    Who loves ya, baby!

  34. karen says:

    Gavshire, i’m with you on gold and commodites… and i agree with you on the absurd valuations, as well. i’m keeping a wary eye and watching the $tran and the $wlsh. also, $copper. the big base has already been formed, now maybe a shallow base.. and think infrastructure rebuild.. not homebuilding.

  35. Onlooker from Troy says:

    Ahhh! I feel better now. Doug Kass is calling for caution and moving into short positions. I feel somewhat validated now. :)

    I hope his contrarian antenna are still as finely tuned as they were at the March bottom. Of course the next dilemma will be whether to and when to buy that dip/drop. Hmmm.

  36. I-Man says:

    I wonder how many stops are set around that 34 level on the Q’s… This could be a nasty close.

  37. DL says:

    I-man @ 3:22

    That is the bear argument… that a whole series of stops will be hit, creating a “domino effect”. One thing striking about the ’29-’32 bear was how swift and severe the declines were after each rally ended.

  38. karen says:

    anyone else feel like they are watching a horse race today? particularly the spx… it’s nose and nose…

  39. HCF says:

    > anyone else feel like they are watching a horse race today?

    Maybe if we grab a few mint juleps and have all the ladies wear absurd hats =)


  40. Mannwich says:

    And DOWN the stretch they come…….

  41. karen says:

    oh, HCF, did you have to mention mint juleps?! in sterling cups, of course : ) now i’m really thirsty.

  42. DL says:

    No close above 875.

    Bulls losing their mojo?

  43. Mannwich says:

    Let’s see what Friday has in store before we make that call. I’m still very cautious but the madness does seem to be slowly petering out.

  44. I-Man says:

    @ DL:
    I’m beginning to think so… no close above 875 is bad juju for the SPX. Maybe that GDP number starting to sink in a bit.

    The Q’s look absolutely terrible- What say you on those last two candles we have there on the daily charts oh Mistress of the Stick?

    Check out the dump on XLF during the last 15 min’s of todays session too…

  45. HCF says:


    I’ve been perfecting my mint julep technique in anticipation of this weekend’s Derby! Oh course, I’d rather watch the daily horserace that the market is, but I’m sure my bosses wouldn’t like seeing me whip out a bottle of bourbon at work!


  46. wally says:

    “Stocks got all the way to the red, falling about a percent from their intra-day highs, before some buyers magically appeared to cushion the blow. The beat goes on….”

    Works like this: the banks and big funds bid each other up until the general public buys back then. Then: Wham! The old Charlie Brown football trick.

  47. karen says:

    I-Man, Now I can’t wait for tomorrow… As for the Qs, I see what you see, but check the 60 minute candles, which give it a half a chance.. so tomorrow is key.. also look at QLD. in 2007, though, i watched the fxi put in so many dojis and hang men, only to be negated the next day.

  48. I-Man says:

    @ Mistress:
    Funny you should mention QLD… I just sold mine on Tuesday and flipped into the QID… a bit early, but I’ve never felt so comfortable in a (slightly) losing position.

    I here you tho- tomorrow is crucial.

  49. karen says:

    I-Man, look at the $spx on a 30 minute chart… you’ll see the perfect turn at the 888… but now we need tomorrow.

  50. I-Man says:

    Its astonishing…

    Does AT still post on here?

    That Wolfe Wave target of 770 on the SPX is a little spooky when overlayed on the Fibo…

    Give us some EW insight Andy…

  51. Mortimus says:

    I Second that. Where is AT?
    I’ve probably hit the reload button 130 times today hoping to get a sniff of his sage advice (and to beef up Barry’s traffic hits).

  52. karen says:

    I think Andy’s last post was on April 27th at 9:31… I can’t get BR’s search to pull it up and I can’t paste it in here. It’s too long to type! Some of it was:

    “… but there’s a decent chance we take out 875 and then “grind” to 900 next few weeks.

    I’m bearish this market over ther medium to longer term (October 2009); but must admit it’s not acting like a market that has “peaked” just yet. I still see the whole 870-906 as a “zone” of resistance.”

    His thots may have changed after today, or since the 27th… he was 25% short the spx, but coupled with a short DX position…

  53. karen says:

    I found his last post. Remember it’s 3 days old! (Andy, take this as a compliment, please!)

    Andy T Says:
    April 27th, 2009 at 9:31 pm
    Love the term “sheeple.”

    What’s on my mind??? Some quick technical thoughts….

    Short, short term bears should be concerned. This is not acting like a market that wants to rollover hard. Swine Flu talk all weekend and all we could do was drop 10-15 pts and then recover? We may see a little dip down to 830s next 24-48 hours, but there’s a decent chance we take out 875 and “grind” to 900 next few weeks.

    I’m bearish this market over the medium to longer term (Oct 2009), but must admit it’s not acting like a market that has “peaked” just yet. I still see the whole 870 – 906 as a “zone” of resistance. If the market can drop very hard in the next 48 hours and take out 822, then the most bearish case comes alive. If the market continues to grind up to 900, then longer term “investors” should look at it as a chance to get out before the summer dump. [There's a very real reason you Sell in May and Go Away.]

    The other thing is the currencies…..the DX, while it was good rebound today, looks very much like it needs to take one more little leg down before resuming it’s longer term uptrend (DEFLATION). Another leg down in the DX will provide the artificial boost necessary to peak all the various asset classes.

    So, if your a short term trader, and you really want to be short the stock market, I would recommend a DX short of some kind to go with it…for now. Don’t mean to come off as a “waffler,” but I have to pay attention to what the market is saying, and right now it’s a little confusing.

    Disclosure: I remain 25% short the sp futures, but have coupled the position with a short DX trade for the short term. It’s time to be nimble with dry powder.

    AT (Andy T. handle replaces Andy Tabbo hereafter)

  54. moneyneversleepsblog says:

    Don’t forget the stress test results coming Monday, maybe some leaks over the weekend. It will be interesting to see how the financials trade especially into the close. Today’s close was not good at all, ugly reversal. Yesterday’s close wasn’t great either but there was some killer strength early in the day. Plenty of indicators argue for some sort of pullback, tomorrow will be interesting for sure. Even though the S&P hit new rally highs the Vix was still above it’s recent lows and ended up closing positive…

  55. call me ahab says:


    agreed- tomorrow should be interesting- I threw a question on a previous thread asking if we would march forward today or whether we would have a reversal- no-one replied- but it was a tough question-

    I had some serious doubts because it appeared to be a BS rally based on nothing to scare out short positions-

    I think the Chrysler BK is seriously bad news and is not a done deal that it will come out surviving- will be up to the courts and how it compensates the creditors- may cause issues with suppliers-does not bode well for GM- pretty ominous

  56. karen says:

    ahab, i see you found your way here from the previous thread, and andy posted there instead of here… so for those that wanted andy’s new latest post, go to the previous thread.

  57. leftback says:

    For those who are curious, I am still away. But I am not “Stillaway”, if you see what I mean.
    Of course I am deeply flattered at the attention to my Leftback Bottom™, and potentially my Top™.

    I managed to stay in my short positions today, by the simple expedient of not watching the market at all.
    There are days when one cannot recommend this method too strongly.

    Perhaps others agreed with ahab that the Chrysler BK really is bad news.
    Or maybe Blankfein hit the red button and sold the SPOOS. Have fun tomorrow, ursine and bvoine friends.

  58. call me ahab says:


    I will have you know that I posted here @ 1:37- I also posted on the other thread- I am a multi tasking poster-

    I did ask AT a question just minutes ago on the previous thread referencing my belief in the Leftback Top™- I was interested in his observation-

    we will see what if anything he has to say

  59. moneyneversleepsblog says:

    So most people seem to be ready for a short term pullback depending on how tomorrow goes (which is a little scary when too many are waiting for the same pullback) but what is verdict around here on whether it is just a nice normal pullback or the start of a new decline that takes the market to new lows??

    That is the real debate whether the rally is truly complete crap or not. The numbers behind the pullback may be the clue.. the buy the dip crowd seems to have come back the last month or two.

  60. leftback says:

    I can’t help feeling that there has to be more deleveraging, more hedge fund and pension fund liquidation. When that happens we will see the US$ strengthen in a way that many of us find unfeasible and nonsensical.

    If we have a few weeks of constant selling, the psychology of the market will weaken dramatically and quickly. So much so, in fact, that the bears would then look back and laugh at the angst around this present rally.

    Patience, prudence and ignoring your emotions are they key to surviving here.

  61. call me ahab says:

    leftback Says:

    “Patience, prudence and ignoring your emotions are they key to surviving here.”

    well said- emotions are key- reminds me of the march to 14,000- I was aghast- what was everyone smokin’?

  62. Mannwich says:

    @money: The rally is truly complete crap. We were definitely oversold in March but there’s no way we should be at these levels already. At least that’s my take but what do I know?

  63. some_guy_in_a_cube says:

    Rising unemployment nearing 20% (U-6) with no obvious job drivers anywhere in sight. Collapsing housing prices. Endless wars. Failed, dysfunctional and corrupt educational, health care, legal and political institutions. Trillions of dollars of debt held by overleveraged individuals and businesses that will never be repaid. Surrender of a bankrupt government and the national economy to a handful of giant hopelessly insolvent banks.

    Sounds like a bottom to me.

    Hope springs eternal.

    See you at SPX 150.

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