As is the case every election year, I’m seeing and hearing a lot about how election years are always positive, and getting a lot of e-mails from non-subscribers asking if the market’s seasonality ever works in election years, since they’re always positive for investors.
I can tell you how our Seasonal Timing Strategy worked in the three election years that have taken place since STS was introduced in 1999.
The years 2000, 2004, and 2008 were election years.
As shown in the table in the Sample issue of our newsletter, or in its description (Seasonal Timing Strategy) on the Street Smart Report website, our STS was up 2.1% in 2000, when the S&P 500 was down 9.1% for the year (and the Nasdaq plunged 39%). In 2004, our STS was up 8.1%, but the Dow was up only 5.5%. And in 2008, our STS was down only 3.6% when the S&P 500 was down 36% for the year, and the Dow lost 31%. So our version of seasonality certainly worked in the way it was designed even in election years.
Regarding election years in general, as subscribers know, five months ago, in December, I provided a study of election years going back to 1920 for subscribers to keep in mind for this year. You can see it by clicking on this link. The Truth About Election Years! Dec. 16, 2011. It includes a table of each election year since 1920, the incumbent president at the time, his party affiliation, whether the market was up or down for the year, and by how much.
Summing it up:
Of the 23 election years, 15 were positive, or 66.7%.
However, ignoring whether or not they were election years, over those 91 years, 62 were up anyway, or 68%.
Conclusion: The market was up in 68% of years overall, and 67% of election years. So, whether it was an election year or not had no effect on the market’s performance.
Of the 23 election years, the market was up 63.3% of the years when a Democrat was the incumbent president, and 66.7% when it was a Republican.
Conclusion: It makes no difference which party is in the White House at the time of the election.
Images: Flickr (licence attribution)
About The Author
Sy Harding publishes the financial website www.StreetSmartReport.com and a free daily Internet blog at www.SyHardingblog.com. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!