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The concept of Financial Presidential Trading Cycles revolves around the theory that U.S. stock market performance follows a predictable pattern based on the four-year cycle of presidential elections. Here's a summary of this phenomenon, integrating insights from various sources, including "Beating the Dow" by Michael B. O'Higgins:
The Theory Overview:
Cycle Start: The cycle typically begins in the year following a presidential election.
First 1½ Years: According to some analyses, including those discussed by O'Higgins, the stock market tends to experience weaker performance or increased volatility in the first year and a half after a new president takes office. This is attributed to the new administration's policy adjustments and economic uncertainties.
Mid-Cycle (1.5 to 2.5 Years Post-Election):
After this initial period, the theory suggests a turnaround. From around 1½ years after the election, the market often begins to strengthen, particularly in the third year of the cycle. This is thought to be due to the administration's focus on stimulating the economy before the next election, creating a more favorable environment for stocks.
End of Cycle (Last 1½ Years):
The period from around 2½ years into the term until the end of the cycle can show a more disciplined trend, where markets might either maintain their gains or experience a rally as the election approaches. However, there's also a noted tendency for markets to start declining or become more volatile towards the end of the fourth year, as the focus shifts to the upcoming election.
#finances #stockmarket #report #election
The Theory Overview:
Cycle Start: The cycle typically begins in the year following a presidential election.
First 1½ Years: According to some analyses, including those discussed by O'Higgins, the stock market tends to experience weaker performance or increased volatility in the first year and a half after a new president takes office. This is attributed to the new administration's policy adjustments and economic uncertainties.
Mid-Cycle (1.5 to 2.5 Years Post-Election):
After this initial period, the theory suggests a turnaround. From around 1½ years after the election, the market often begins to strengthen, particularly in the third year of the cycle. This is thought to be due to the administration's focus on stimulating the economy before the next election, creating a more favorable environment for stocks.
End of Cycle (Last 1½ Years):
The period from around 2½ years into the term until the end of the cycle can show a more disciplined trend, where markets might either maintain their gains or experience a rally as the election approaches. However, there's also a noted tendency for markets to start declining or become more volatile towards the end of the fourth year, as the focus shifts to the upcoming election.
#finances #stockmarket #report #election
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