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Year 2 in 4 Year Presidential Cycle

Posted By Barry Ritholtz On August 16, 2013 @ 11:30 am In Cycles,Investing,Politics,Technical Analysis | Comments Disabled

Click to enlarge
Chart [1]
Source: The Chart Store via All Star Charts [2]

 

We have not looked at the Presidential Cycle [3] in some time (See this [4], this [5] and this [6] from 2005).

Regardless, it is something that people often fail to contextualize correctly: What the chart above shows is the historical average of the 4 year presidential cycle.

The caveats about these are they reveal a form of soft probability, and not forecasts. If second years have often been historically weak, that is not the same as saying second years are ALWAYS historically weak. At best, it might reveal a tendency.

The causation element is usually described thusly: Presidents want to get re-elected (or see their party keep he White House). So they do all of the unpleasant things which might hurt over the short term but should lead to positive economic gains by the next presidential election year.

 


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2013/08/worst-time-in-presidential-cycle-begins-now/

URLs in this post:

[1] Image: http://www.ritholtz.com/blog/wp-content/uploads/2013/08/8-15-13-presidential-cycle.png

[2] All Star Charts: http://allstarcharts.com/worst-time-in-presidential-cycle-begins-now/

[3] Presidential Cycle: http://www.ritholtz.com/blog/?domains=http%3A%2F%2Fwww.ritholtz.com%2F&sitesearch=http%3A%2F%2Fwww.ritholtz.com%2F&cx=015905226837203657063%3Ax1cwdcykvvw&ie=UTF-8&oe=UTF-8&cof=FORID%3A11&s=Search&q=Presidential+Cycle

[4] this: http://www.ritholtz.com/blog/2010/01/year-2-of-the-presidential-cycle-the-historical-record/

[5] this: http://www.ritholtz.com/blog/2011/02/tracking-the-presidential-stock-cycle/

[6] this: http://www.ritholtz.com/blog/2005/12/4-year-presidential-cycle/

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