Presidential Election Cycle

During mid-term election years October, November and December have followed September as the three strongest months. Since 1930, the S&P 500 has gained an average of more than 2.5% in October, 2.0% in November and about 1.8% in December. If the pattern persists, these historically strong months will lead into the pre-election year of the Presidential Cycle.

As you can see by the chart, courtesy of Stock Trader’s Almanac, it has produced the best results by far than any other year of the cycle. Since 1900, the Dow has gained an average of 12.4% compared to the next best gain of 7.5% posted during election years. There has not been a losing pre-election since 1937 when Franklin Roosevelt was President. There have been 23 up years recorded versus only five down years. But some of those down years were whoppers as the Dow posted a loss of 52.7% in 1929, 37.7% in 1905 and 23.6% in 1901.