Mohan: Here is view about this OCTOBER.
VectorVest
by
Dr. Bart A. DiLiddo October 02, 1998
V i e w s
The Presidential Election Cycle. One year ago, I wrote about "The Angst of October." October is known as the month of crashes, calamities, and unexpected surprises. Last year it brought the"Asian Contagion." What will October bring this year?
Believe it or not, October is not always bad. Yes, it has a good side. October has given birth to more Bull markets thanany other month. And this year may be something speciaI. According to Mr. Richard Stoken, author of "Strategic Investment Timing," this October marks the_ beginning of "the really juicy" part of the current electlon cycle.
The election cycle is a phenomenon in which the stock market gains far more during the last two years of a President's term than it does during ~the first two years. Indeed, in the 41 administrations since 1832, the total net market gain for the last two years was 612% vs. a a gain of 79% for the first two years. The last cycle was true to form with a net gain of 5% for 1993 and 1994 vs. a combined gain of 55% for 1995 and 1996. The gain in the S&P 500 for the first 21 months of Mr. Clinton's current term is 30%. Can the market do better?
Mr. Stoken says it can. He claims that the fifteen month period beginning in early October, two years before the Presidential election, and lasting until early January of the election year outperforms the other 33 months of a President's term by a 25 to 1 margin. I examined Mr. Stoken's claim and found that there have been exceptions. However, as I suggested in my book "Stocks, Strategies and Common Sense," that he could be right in 1998.
Why did I say that? Mainly because I felt 1998 would be a subpar year, thereby making it more likely that a market rebound would occur. Given the steep correction of the last 12 months, it appears that a major rebound is quite possible, but a lot has to be done.
The incumbent administration knows that jobs are the main factor in deciding who gets elected president. They will do everything in their power to keep the economy going, but can they do it? This is the key to putting the "Angst of October" behind us, and reaping the rewards of the Presidential Election Cycle. |
