A Pattern Is Revealed

| January 11, 2020
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So exclaimed a headline in Barron’s. It is as if they found the key to the markets. As they outlined:

A week does not a year make, but it may offer some clues as to where the market will end 2020. History shows that the S&P 500 index has ended the full year in the same direction as it began in 82% of presidential-election years since 1950, according to data compiled by Dow Jones Market Data.

I guess they want this to be a reason you buy stocks and subscribe to Barron’s because if history is any guide the market has an 82% chance of finishing in positive territory since the first five trading days were positive.

Buy – Buy – Buy

I went and calculated and found that in 14 of the 17 election years going back to 1952 the S&P 500 was positive in 14 of those 17 years. This is a total of 82%. So if history is to tell us anything it is that election years are positive, regardless of the first five trading days of the year.

But there headline sound better – I guess.

Another note: the S&P 500 was positive in 74% of the years since 1952 so the tendency of markets are to move higher.

More to the point. If you use this data point as a reason to buy or sell please do yourself a favor and remove this data point from your process.

Rant over! Enjoy your Saturday!


Stay Tuned, Disciplined & Patient! {TJM}

The Investor & Character Equation (ICE) | S + R = O


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