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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread
VTI 336.14+0.9%Dec 19 4:00 PM EST
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To: Justa Werkenstiff who wrote (6877)1/3/2012 11:00:00 AM
From: Justa Werkenstiff  Read Replies (1) of 10065
 
Hi All:

So what does a flat/negative third year of the presidential cycle portend for year four?

"So what’s interesting is we’ve never had a decline in year three of a presidential cycle since World War II. You actually have to go back to 1939 to find a 5.5-percent decline in that third year. Then, you have to go back earlier than the 1930s to find the other one.

Furthermore, I discovered that if the market advance was one-half of the average price increase of the third year–which has been 17 percent since WWII–then we end up having a sub-par fourth year of the president’s term in office. Specifically, any time we had a return of 8.5 percent or less we ended up having an average price change of minus 10 percent in the fourth year. Of the six observations where this occurred, the market fell five times. So it’s not a good thing if we don’t get a meaningful rally in the third year of a president’s term in office."

editorial.equities.com
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