Post-Election Years Are Historically The Worst

When we talk about the Presidential Cycle, it’s the first of the four years that worries us the most. If you look at the data going back to the year 1833, the post-election year is historically the worst, by far. I grabbed this chart from Jeff Hirsch’s excellent book, The Little Book of Stock Market Cycles (see my review). It’s hard not to notice the dramatic difference between the last 2 years of the cycle, and the underperformance of the first two.

This week, Jeff took these numbers to a whole new level by analyzing what happens when the incumbent party wins an election. Furthermore, he takes a look at the consequences of a sitting Democrat winning the race:

If history is telling us anything here, it’s probably to be careful entering 2013. But we need to look at this stuff within the context of the many inputs that we incorporate into our technical analysis. We use a top/down approach and analyze all asset classes and all countries around the world (see here). But seasonal trends, specifically in US Equities, are something that we take very seriously. So stay tuned…

 

Sources:

It’s Time For a Year-End Exit Strategy Says Hirsch (YahooBreakout)

The Little Book of Stock Market Cycles (Jeff Hirsch)

Tags: $SPY $DJIA


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