The Peak of the Presidential Cycle

We’re coming up on the traditional peak in the four-year presidential cycle.

I took the entire history of the Dow Jones back to 1896 and crunched how it performs in four-year segments.

On August 4 of the post-election year, the Dow has historically peaked. This mini-bear market lasts until September 30 of the mid-term year.

Over that time, the market loses about 2.58%. That may not seem like a lot—and it’s not—but for a 14-month segment in a 125-year data series, it stands out.

For the other 34 months, the Dow has had an average gain of 38.73%. There’s another slow period from the middle of the pre-election year to the middle of the election year.

I don’t put faith in these types of stats. I think they’re interesting in a general sense. I would never make a market decision based on this.

Still, it’s interesting that incumbent presidents probably have had an effect on the stock markets. They work to make the economy peak by election day. The rally lasts for a few months before it stalls out. The market eventually bottoms around the mid-term elections.

Posted by on July 19th, 2021 at 11:16 am


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