Market Precedents And Presidents

28 Oct Market Precedents And Presidents

The stock market is a tricky puzzle to try and solve, with too many variables to even count. Although many investors and Wall Street wizards claim to have the “secrets” to the market and even claim to be able to predict it. If they really had these secrets I doubt they would be telling anyone about them let alone selling them in books and subscriptions. However accurate or inaccurate these so called secrets are, there is a reference which most investors study which can help to predict the future trends of the stock market based on statistics and historical evidence, this is called the “Stock Trader’s Almanac,”.

For the past forty-nine years, this almanac has gathered statistical information that can prove seasonal trends and patterns in the stock market, which can be used to predict where the stock market will be headed. One of the most interesting trends in the almanac is the third year, or pre-election pattern. The DJIA hasn’t experienced loss in the pre-election year since 1939 when Germany invaded Poland, which are some hard statistics to argue with. The same can almost be said for the S & P 500 which in 2011 experienced a loss of 0.003 percent. Historically the best period to invest is in this presidential sweet spot, would be the fourth quarter of the midterm year and the next two following in the year after which will end June 30^th. Since 1949 this sweet spot has yielded impressive returns; with average gains of 21.6 percent for the DJIA, 22.2 percent for the S&P 500 and 34.1 percent for the NASDAQ (since 1971). This doesn’t seem discouraging until you look at the gains this year. Through early June, the gains are: DJIA up 4.7 percent; S&P 500 up 6.1 percent; NASDAQ up 12.8 percent. Also the seventh year of a two term presidency will, on average, only return half of the amount gained during pre-election years. According to the almanac, his means that this year’s best returns are quite possibly behind us. But what else does the almanac tell us? Unfortunately it’s not the best news. According to the Stock Trader’s Almanac, we could soon be entering the “worst six-month” period of the market. This trend predicts that the S&P 500 will make gains of around one percent between June and October, with the possibility of even lower returns.

But what does this all mean to you? Well basically the markets best days are behind us for now, which means you probably don’t want to take any risks with your money. During this time there are not going to be a lot of guarantee for returns in the stock market, so why wouldn’t you put your money where there IS a guarantee. Investments such as fixed annuities, life-settlements, and mutual funds, all offer a low-risk and safe return option for those trying to make money without putting what they have at risk. There are options out there for budgets of almost any size that can be personalized to fit your needs and wants, contact your investment advisor today to find out what plan is right to keep you, and your money, safe.