TigerSoft Freedom News Service 1/31/2009 www.tigersoft.com
February and March are Bearish Months
in The Year After A Presidential Election
by William Schmidt, Ph.D. (Columbia University)
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February and March are Bearish Months
in The Year After A Presidential Election
Breaking the data down for where we are in the 4-year Presidential Election year cycle
shows the bearish and bullish political factors more clearly at work on the market. Just as
the incumbent Party may be expected to try hard to stabalize the market in the year before a
Presidential Election, it is likely it will make the wrenching changes in the year after the Election
and seek to produce a run-up in the stock market in the 2nd and particularly the 3rd year of
the cycle. That certainly emerges from Arthur Merrill's research.
By this theory, we should expect Obama to do his "bashing" of Wall Street executives
now and blame the Bush Administration for the consequences. And that is ehat is in the news.
See Obama Blasts Wall Street Bonuses - BusinessWeek This typically starts after the
the Innauguration. The data show this. Januaries in the year after a Presidential Election
are about as bullish as all Januaries since 1965, 1.5% avg gain versus 1.4%, respectively
and showing 70.4% and 67.4% respectively. But Februaries and Marches in the Presidential
Election year are much worse for stock prices.
Years after A Presidential Election
In 1917, 1921, 1925, 1929...2001 and 2005, Februaries produce avergage DJI declines
of 1.4% and rallies only 34.8% of time. In 7 of these 24 Februaries, the DJI fell more than 3.4%.
When January was down as it was in 2009. Februaries were twice as likely to decline when
January was down. When January was down more than 4%, 1957, 1973 and 1977,
February was always down. This takes on added significance when we consider that January 2009
was down more than any January on record, a whopping 8.8%
Marches generally do better than Februaries when all the years since 1965 are considered.
But they are distinctly negative in years after a Presidential Election. .While their average change is
about zero, these Marches produce gains only 39.1% of the time. When the previous February was
down, which is true 65.2% of the time, Marches were down 10 times and rose only 5 times.
All Years 1966-2008
Subsequent 21 trading day performance
Pct of years Up Avg. Gain
Jan 67.4% 1.4%
Feb 53.5% 0.4%
March 67.4% 0.7%
April 68.2% 2.3%
May 43.2% -0.1%
June 52.3% -0.3%
July 51.2% 0.5%
Aug 55.8% -0.2%
Sept 34.9% -0.6%
Oct. 58.1% 0.5%
Nov. 67.4% 1.0%
Dec. 69.8% 1.8%
Years After Presidential Election
Jan 31 Feb 28 March 31 April 30 May 31 June 30
1917 95.40 91.60 96.70 93.20 97.40 95.40
1921 75.50 75.00 75.80 78.60 73.40 68.70
1925 123.50 122.20 116.80 120.00 129.90 129.20
1929 317.50 317.40 308.90 319.30 297.40 331.30
1933 60.9 51.40 55.40 73.10 90.00 98.10
1937 184.7 187.20 186.40 174.30 174.70 169.30
1941 124.1 121.90 122.70 115.50 116.20 123.19
1945 153.70 160.40 154.10 165.40 168.30 166.20
1949 179.10 173.10 177.10 174.10 168.40 167.40
1953 289.90 284.30 279.90 274.80 272.30 268.30
1957 478.20 464.60 474.80 494.40 504.90 503.30
1961 648.20 662.00 676.60 678.70 696.70 683.90
1965 902.90 903.50 889.10 922.30 918.00 868.00
1969 946.05 905.20 935.50 950.20 937.60 873.20
1973 992.93 955.10 951.00 921.40 901.40 891.70
1977 957.53 936.40 919.10 926.90 898.70 916.30
1981 948.89 974.60 1003.90 997.80 991.80 976.90
1985 1286.77 1284.01 1266.78 1258.06 1315.41 1335.46
1989 2258.39 2293.62 2418.80 2480.14 2440.06 2660.66
1993 3310.03 3370.81 3435.11 3427.55 3527.43 3515.08
1997 6813.09 6877.74 6583.48 7008.99 7331.04 7672.79
2001 10887.36 10485.28 9878.78 10734.97 10911.94 10502.40
2005 10489.94 10766.23 10503.76 10192.51 10467.48 10274.67
2009 8000.86
Jan 31-March 31 March 31-June 30
8 up 14 up
15 down 9 down
Year After Presidential Election Year
Month By Month Pct Gains
January February March April May June
12/31 1/31 Gain 2/28 Gain 3/31 4/30 5/31 6/30
1917 74.40 95.40 +28.2% 91.60 (-4.0%) 96.70 +6.3% 93.20 97.40 95.40
1921 72.00 75.50 +4.9% 75.00 (-0.6%) 75.80 (-0.7%) 78.60 73.40 68.70
1925 120.5 123.50 +2.5% 122.20 (-1.1%) 116.80 (-4.4%) 120.00 129.90 129.20
1929 300.00 317.50 +5.8% 317.40 (-0.0%) 308.90 (-2.7%) 319.30 297.40 331.30
1933 60.3 60.9 +1.0% 51.40 (-15.6%) 55.40 +7.8% 73.10 90.00 98.10
1937 179.9 184.7 +2.7% 187.20 +1.4% 186.40 (-4.3%) 174.30 174.70 169.30
1941 131.1 124.1 +5.3% 121.90 (-1.8%) 122.70 (-0.7%) 115.50 116.20 123.19
1945 151.90 153.70 +1.2% 160.40 +4.4% 154.10 (-3.9%) 165.40 168.30 166.20
1949 177.30 179.10 +0.5% 173.10 (-3.4%) 177.10 +2.3% 174.10 168.40 167.40
1953 291.90 289.90 (-0.4%) 284.30 (-1.9%) 279.90 (-1.5%) 274.80 272.30 268.30
1957 499.50 478.20 (-4.3%) 464.60 (-2.8%) 474.80 +2.2% 494.40 504.90 503.30
1961 615.90 648.20 +5.2% 662.00 +2.1% 676.60 +2.2% 678.70 696.70 683.90
1965 874.10 902.90 +3.3% 903.50 +0.1% 889.10 (-1.6%) 922.30 918.00 868.00
1969 943.75 946.05 +2.4% 905.20 (-4.3%) 935.50 +3.3% 950.20 937.60 873.20
1973 1034.02 992.93 (-4.0%) 955.10 (-3.8%) 951.00 (-4.3%) 921.40 901.40 891.70
1977 1004.65 957.53 (-4.7%) 936.40 (-2.2%) 919.10 (-1.8%) 926.90 898.70 916.30
1981 963.99 948.89 (-1.6%) 974.60 +2.7% 1003.90 +3.0% 997.80 991.80 976.90
1985 1211.57 1286.77 +6.2% 1284.01 (-0.2%) 1266.78 (-1.3%) 1258.06 1315.41 1335.46
1989 2168.57 2258.39 +4.1% 2293.62 +1.6% 2418.80 +5.5% 2480.14 2440.06 2660.66
1993 3301.11 3310.03 +0.3% 3370.81 +1.8% 3435.11 +1.9% 3427.55 3527.43 3515.08
1997 6448.27 6813.09 +5.7 6877.74 (-4.3%) 6583.48 (-4.3%) 7008.99 7331.04 7672.79
2001 10786.85 10887.36 +0.9% 10485.28 (-3.7%) 9878.78 (-5.8% 10734.97 10911.94 10502.40
2005 10783.08 10489.94(-2.7%) 10766.23 +2.6% 10503.76 (-2.7%) 10192.51 10467.48 10274.67
2009 8776.39 8000.86(-8.8%)
================================================================================================
n=24 n=23 n=23 n=23 n=23 n=23
17 up 70.4% 8 up 34.8% 9 up 39.1% 13up 56.5% 13up 56.5% 8 up 34.5%
7 down 15 down 14 down 10 down 10 down 15 down
avg = +1.5% avg = -1.4% avg = 0.0%
