Pre-Presidential election years: No stock declines in 76 years

Pre-Election year markets are almost always a win-win for investors and historically the strongest of the four-year cycle, according to the Stock Trader’s Almanac. There hasn’t been a down year in the third year of a presidential term since war-torn 1939, when the Dow Jones Industrials (^DJI) fell 2.9%.

While investors should feel pretty good about the rest of the year, the almanac’s editor-in-chief Jeff Hirsch, is not as bullish as he would be if this were a first term pre-election year. “This is the second term for a president and the second midterm years have been a bit softer.” As a result Hirsh says investors should dial down down their expectations for stock gains in 2015.

Get the Latest Market Data and News with the Yahoo Finance App

Typically there is an average 50% move from a mid-term low to a pre-election year high but Hirsch is predicting lesser gains this year. “I don’t think we will get that full 50% this year. I think maybe 20% or 30% from that low. We’ve already tacked on about 16% to 17%.”

Hirsch expects the lion’s share of the gains to come during the first half of the year before the battle for the White House picks-up steam, which usually occurs during the fall time frame of a pre-election year. He is forecasting a run in the Dow Jones Industrials to the 19,000 level, the S&P 500 (^GSPC) to 2250 and sees the Nasdaq (^IXIC) potentially flirting with 5000.

While it’s tough for anyone to predict exactly where the market will land, investors can take comfort in the well documented stat recorded in the Stock Trader’s Almanac that the only severe loss in a pre-presidential election cycle year going back 100 years occurred in 1931 during the Great Depression when the Dow Industrials declined nearly 53%.

 More from Yahoo Finance
Hasbro: The boys are back in town
Tiger Woods’ golf game isn’t dead yet

You may also like...

Rules of Discussion on Pre-Presidential election years: No stock declines in 76 years

1. This forum is for discussion of financial markets. Please respect others view even if they are contrary to you.
2. Member's comments should lead to value addition in forum discussion.
3. If anyone is found making repetitive Explicit/Abusive/Racial comments, his account shall be banned and old posts will be deleted.
4. Providing Advice/Recommendations/Tips is fine but it should be free. Members cannot ask to be paid for it. Paid Advice is strictly prohibited
5. Spam links are not allowed. Too much promotion or using Contact info in ID will lead to account ban.
IMP : Members are requested to flag any violations to keep Forum Clean.
Loading comments …