One of the most studied cycles in stock market analysis is the presidential cycle. The stock market is more likely to perform better in the last two years than in the first two years of a presidential term. There are several theories why, such as the first two years the tough bitter economic decisions are made, and the second two years the administration wants a good market and economy to get re-elected.
Ken Fischer, investment manager and author, noted that the market ends in positive territory 50% of the time in the first year, 60% in the second, 90% in the third and 85% of the time in the fourth.
But the returns are highest in the third. Average returns are 7.2%, 8.7%, 20%, and 13.3 % in years 1-4, respectively.
Ken is bullish, but then the market dropped 366 points today.