Year Lows Stocks
Year Lows Stocks
Investing in Election Years!
INVESTING IN ELECTION YEARS! June 13, 2008.
Since 1940 there have been only four negative election years, in which the market was down by year end, with the declines averaging just 5.2%.
The most recent occurrence was the year 2000, when the Dow was down 13.2% in a mid-year correction but rallied back to close down just 6.2% for the year (even though as it turned out, it was the first year of the severe 2000-2002 bear market).
So this election year has been somewhat unusual so far.
The Dow was already 6.5% below its peak of last October when this year began. It then declined another 11.5% from the beginning of the year to its correction low in early March. At that point it was 19% below its peak of last October, very close to the definition of a bear market (a 20% decline).
An intermediate-term rally began from the oversold condition at that March low. But at least at the moment it looks like it ended in early May. The Dow is now down 6.5% over the last six weeks, and down 14% from its peak of last October, with many analysts predicting it is on its way down to at least retest its March low.
So, what is so different about this election year?
I believe it comes down to this.
In almost every instance of the Four-Year Presidential Cycle since at least 1918, economic slowdowns, serious stock market corrections, and bear markets, have taken place in the first two years of each Presidential term, while Washington ignored the economy and allowed the correction of excesses to take place.
Then like magic, Washington’s focus would turn to the economy in the 2nd and 3rd years of each term. All the stops would be pulled out, in the way of lower interest rates, increased government spending, and whatever other stimulus efforts were needed to make sure the economy was strong by the time the next election year arrived.
That has been the norm no matter which party was in office, and is the basis of the extremely consistent Four-Year Presidential Cycle.
It sure happened that way in the first administration of President Bush, with the 2000-2002 bear market in the first two years of the term, and then the largest stimulus plan ever to come out of Washington in 2002 and 2003, in plenty of time to end the bear market, and have the economy and stock market looking good in time for the 2004 election campaign.
However, that did not happen in this Four-Year Presidential Cycle.
There was not even a 10% ‘pullback’ in the market in 2005 and 2006, let alone a normal market correction. And in spite of the housing bubble bursting in 2006, economic growth slowing, and the banking system coming close to total collapse last year, there were no stimulus efforts to provide support for the economy until this year, the election year.
So here we are in a rare election year indeed, when rather than being super strong, the economy is slowing dramatically, and may even be in a recession within months if it is not already. (The Fed is now forecasting economic growth for this year of only 0.3% to 1.2% for the year, down from its already dismal forecast of 1.3% to 2.0% just a couple of months ago).
Rather than being optimistic and full of enthusiasm, as is usually the case in the good economic times of election years, consumer and corporate confidence levels are at multi-year lows of pessimism. For example, the University of Michigan/Reuters Consumer Sentiment Index released Friday morning fell to just 56.7 in June, down from 59.8 in May, and down from 96.9 sixteen months ago. This month’s reading is a 28-year low.
So, although election years tend to be positive for the stock market, the risk of a serious correction this year can hardly be argued against simply because it is an election year. This is one of the most different election years ever for the economy and the market.
Sy Harding publishes the financial website www.StreetSmartReport.com and a free daily Internet blog at www.SyHardingblog.com. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beating the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!
Stocks Hit 12-Year Low
|
|
Oneida Colonial Boston 45-Piece Stainless-Steel Flatware Set, Service for 8 $52.95 Reflecting Boston’s long heritage of silversmithing, this pattern is similar to those sturdy and simple pewter utensils used by early American colonists. Typical of classic clean-lined design it would work just as well with modern surroundings…. |
|
|
Corelle Livingware Winter Frost 16-Piece Dinnerware Set, Service for 4 $29.63 Since Corelle is famous for producing dinnerware and bakeware that cannot be broken or chipped, it’s hard to resist holding a plate without wanting to drop it on the tile floor to see what happens. While Corelle doesn’t recommend home tests, this casual 16-piece dinnerware set is still fairly indestructible and is a real asset for busy families. Livingware is easy to maintain as it’s dishwasher-, … |
|
|
Eccotemp FVI-12-LP High Capacity Propane Tankless Water Heater $269.00 Clean, compact and feature – packed. Energy – efficient Eccotemp Power – vent Tankless Water Heater saves you BIG BUCKS! Hot water is one of those little modern accessories that makes life worth living. And here’s the next step in its evolution! This Tankless Heater is the model of efficiency, only using energy when you actually turn on the hot water. 74,000 BTU LP gas burner lets it deliver 3 gal… |
|
|
DesignTech FM Voyager Wireless Transmitter $49.95 Simply plug the FM Voyager cord into your music player, plug the FM Voyager into the cigarette lighter outlet, select one of twelve available channels on the digital display, and tune your vehicle s FM radio to the corresponding station. FM Voyager send’s your portable player’s audio signal wirelessly to your car’s FM stereo. FM Voyager delivers premium sound quality. Other FM transmitters can … |
|
|
Generac Guardian Series 5873 17,000 Watt Air-Cooled Liquid Propane/Natural Gas Powered Standby Generator With Transfer Switch (CARB Compliant) $3,694.00 17/16KW, Air Cooled Stand By Generator, Nexus Controller, Powers 16 Circuits Of Your Home Or Business Such As: Furnace, Water Heater, Kitchen, Including Refrigerator, Bathroom, Bedroom, Sump Pump, Family Room, True Power Technology Provides Safe Operation Of Sensitive Electronic Equipment & Appliances, Easiest Installation With The Pre-Wired, Pre-Packaged 100A, NEMA 1, Indoor Rated Only, Automatic… |
|
|
Wal-Mart: The High Cost of Low Price $8.78 Everyone has seen Wal-Mart’s lavish television commercials, but have you ever wondered why Wal-Mart spends so much money trying to convince you it cares about your family, your community, and even its own employees? What is it hiding? WAL-MART: The High Cost of Low Price takes you behind the glitz and into the real lives of workers and their families, business owners and their communities, in an … |
|
|
Robert Kleinschmidt | Jeffrey Applegate $17.95 Tocqueville Fund’s contrarian money manager Robert Kleinschmidt and Morgan Stanley Smith Barney’s Chief Investment Officer Jeff Applegate, and their surprising views of the opportunities and risk in global stock markets.This product is manufactured on demand using DVD-R recordable media. Amazon.com’s standard return policy will apply…. |
|
|
Sanyo XX Battery Powered by eneloop, 2500mAh High Capacity, 4 Pack AA Ni-MH Pre-Charged Rechargeable Batteries $24.99 RECHARGEABLE UP TO 500 TIMESLOW SELF DISCHARGE MAINTAINS 75% OF THEIR CHARGE AFTER 1 YEAR OF STORAGESTABLE VOLTAGE WITH LONGER POWER LIFE THAN ALKALINE BATTERIESNO MEMORY EFFECTSRECHARGES EMPTY OR PARTIALLY DRAINED BATTERIESPERFECT FOR USE IN POWERING HIGH DRAIN DEVICESUPC : 0086483080159Shipping Dimensions : 0.62in X 3.69in X 4.47inEstimated Shipping Weight : 0.29… |
|
|
Energizer Max Alkaline Batteries … |
|
|
Avery Half-Fold Greeting Cards for Inkjet Printers, 5.5 inches x 8.5 inches, White, Matte, Pack of 20 (03265) $6.99 Ideal for birthday and holiday cards invitations and announcements. The high-quality heavyweight stock and special two-sided coating maximize inkjet printer colors. Premium scoring allow for easy folding and clean neat edges. Includes matching envelopes. Paper Color(s): White Card Height: 5 1/2 in Card Width: 8 1/2 in Cards Per Sheet: 1.Unit of Measure : Box… |
