Years Ending in ‘5' and the Presidential Cycle (Preview)

By Lawrence G. McMillan

There are some longer term seasonal patterns that affect the stock market.  One is that years ending in ‘5’ have generally been quite bullish since the first one in 1895 (to go back that far, one must observe the Dow, for $SPX did not exist).  In fact, such years were mostly wildly bullish until 2005, when $SPX registered only a small gain (and the Dow registered a small loss).  Even worse, in 2015, both registered small losses.  However, overall, years ending in ‘5’ have a strong track record.

Another thing that is often watched is what is called the 4 year Presidential Cycle.  In general, the market rises modestly in the first year after a Presidential election, but in the second year trouble arises for the stock market.  Then, in years three and four, the market rallies again as the administration in power attempts to boost the economy to get re elected.  The following table includes results back to 1933...