The Only Months That Matter in 2017

  • SumoMe

2017 is a post-election year.  During the 1960’s to the 1980’s the “post-election year” gathered a reputation as being a “bad year” for the stock market.  But the truth is that starting in 1985 the post-election year has been a pretty good one for the stock market.

(See also This is Why We Trade)

Figure 1 displays the growth of $1,000 invested in the Dow Jones Industrials Average ONLY during each post presidential election year since 1901 (using month-end price data).1Figure 1 – Growth of $1,000 invested in Dow Jones Industrials Average during “Post-Election” years since 1901 (using month-end price data)

 The “Big Two” Months

Figure 2 displays the growth of $1,000 during post-election years since from 1901 through 2016 broken down into two categories:

*The months of July and December only

*All other post-election year months

2Figure 2 – Growth of $1,000 invested in Dow ONLY during July and December of post-election years (blue line) versus the “Other” 10 months of the year (red line); 1901-2016

(See also Jay’s Trading Maxim’s (Part 1))

As you can see the months of July and December combined:

*Cumulative gain = +161%

*# times showing a net gain = 21 (72%)

*#times showing a net loss = 8 (28%)

The “Other” 10 months combined:

*Cumulative gain = +18%

*# times showing a net gain = 16 (55%)

*#times showing a net loss = 13 (45%)

Summary

So does this mean that we should have our money in a mattress until July? Not necessarily (obviously, with the Dow already up +5.4% for the year).  This tidbit of information regarding July and December of post-election years is not intended to constitute a “trading system” per se.

It is interesting to note though the relatively consistent performance for the stock market during these two months and the relatively inconsistent performance of the stock market during the other 10 months of the post-election year.

Jay Kaeppel

Disclaimer:  The data presented herein were obtained from various third-party sources.  While I believe the data to be reliable, no representation is made as to, and no responsibility, warranty or liability is accepted for the accuracy or completeness of such information.  The information, opinions and ideas expressed herein are for informational and educational purposes only and do not constitute and should not be construed as investment advice, an advertisement or offering of investment advisory services, or an offer to sell or a solicitation to buy any security.

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