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Independence, MO —
Since stock market lows usually occur in the third quarter, I thought it might be instructive to check their history in presidential election years. My charts only go back to 1916 for the Dow Jones Industrial Average, but most of you don’t remember any further back anyway, so I stopped digging.
Why should we pay any attention to such statistics? You well know the disclaimer: past performance is no guarantee of future results. But lo and behold, the past is usually the best predictor of the future, at least as compared to everything else. Local favorite Albert Pujols may not have started off well in his new league this year with the Angels, but with his work ethic, it is a safe bet that he will finish stronger and continue to progress higher toward his former sterling stats.
History in many venues of life seems to repeat itself, not because situations are always the same, but because people remain the same and act according to their habitual reactions to the situations that develop. Exceptions exist, but we forgo some great advantages if we choose to ignore the probabilities.
The prior 20 presidential election cycles take you back to 1932, but it would appear that the past 12 beginning in 1964 shed the most light on our path. Prior to 1964, third quarter lows occurred in September, beginning in 1944, five consecutive times. In earlier years, the cycle seems to have been less predictable with low points coming as early as April and May.
More recently in 12 cycles, they occurred in July or August 10 times. In March 1980, Mr. Market seemed to have bet early on regime change. In 2008, the September low exceeded the August dip as it became too apparent that our economic wheels were falling off. But the strength of 10 of 12 is worth noting. Of those, August notched six and July four.
This year looks like it might produce a result similar to 1980 due to the possible regime change next January. The low thus far came in early June. Since June 1 through last Friday, July 27, the DJIA, S&P 500 and Nasdaq 100 are up by 7.9, 8.4 and 7.3 percentage points respectively. They have also marked four waves of higher highs and higher low points and now stand at their highest points since the current slump began in early May.
While some unexpected event could easily detour this upt rend, I will be ready for any further dips to provide opportunities to buy stocks or stock mutual funds before a new bullish trend really takes off in earnest. Americans are too smart to believe that the answers to our present national dilemma all lie in punishing the business class for being successful.
It is not enough to say, “It is the economy, stupid!” as worked for President Clinton in 1992. More specifically in 2012, “It is the reckless government deficit spending, stupid!”
Oh yes, please remember, past performance is no guarantee of future results. Soon we will know.
(Market statistics from Worden Brothers, Inc., TeleChart 2012)
Since stock market lows usually occur in the third quarter, I thought it might be instructive to check their history in presidential election years. My charts only go back to 1916 for the Dow Jones Industrial Average, but most of you don’t remember any further back anyway, so I stopped digging.
Why should we pay any attention to such statistics? You well know the disclaimer: past performance is no guarantee of future results. But lo and behold, the past is usually the best predictor of the future, at least as compared to everything else. Local favorite Albert Pujols may not have started off well in his new league this year with the Angels, but with his work ethic, it is a safe bet that he will finish stronger and continue to progress higher toward his former sterling stats.
History in many venues of life seems to repeat itself, not because situations are always the same, but because people remain the same and act according to their habitual reactions to the situations that develop. Exceptions exist, but we forgo some great advantages if we choose to ignore the probabilities.
The prior 20 presidential election cycles take you back to 1932, but it would appear that the past 12 beginning in 1964 shed the most light on our path. Prior to 1964, third quarter lows occurred in September, beginning in 1944, five consecutive times. In earlier years, the cycle seems to have been less predictable with low points coming as early as April and May.
More recently in 12 cycles, they occurred in July or August 10 times. In March 1980, Mr. Market seemed to have bet early on regime change. In 2008, the September low exceeded the August dip as it became too apparent that our economic wheels were falling off. But the strength of 10 of 12 is worth noting. Of those, August notched six and July four.
This year looks like it might produce a result similar to 1980 due to the possible regime change next January. The low thus far came in early June. Since June 1 through last Friday, July 27, the DJIA, S&P 500 and Nasdaq 100 are up by 7.9, 8.4 and 7.3 percentage points respectively. They have also marked four waves of higher highs and higher low points and now stand at their highest points since the current slump began in early May.
While some unexpected event could easily detour this upt rend, I will be ready for any further dips to provide opportunities to buy stocks or stock mutual funds before a new bullish trend really takes off in earnest. Americans are too smart to believe that the answers to our present national dilemma all lie in punishing the business class for being successful.
It is not enough to say, “It is the economy, stupid!” as worked for President Clinton in 1992. More specifically in 2012, “It is the reckless government deficit spending, stupid!”
Oh yes, please remember, past performance is no guarantee of future results. Soon we will know.
(Market statistics from Worden Brothers, Inc., TeleChart 2012)
