A.I.M. Users Bulletin Board

[SFSecurity]

On another note entirely, I was reading my American Association of Individual Investor's (AAII) mag last night and saw an interesting comment by James Cloonan (AAII founder) where he mentions a weird cycle that goes back over 100 years that years that end in 5 do better than average and that the 3rd year in a presidential term is also better than average.

"The Mystery Cycle
The election cycle indicates an above average return in the prior to the U.S. national election, this has been widely discussed and will be in the
news as we approach 2015. Twenty years ago, I came across another cycle for which I can find no rationale but that has been pervasive for the last 100 years. It is the positive impact on the market of years ending in 5. This cycle is particularly important in years when it coincides
with the election cycle. This combination occurs only every 20 years, and the year 2015 is one of those years. I have always been suspicious of data
like this that indicates a possible anomaly when I can’t find a rationale for the behavior. In the election cycle we have the rationale that government spending and talk of government spending prior to the election boosts expectations, but I cannot think of any cycle for years ending
in 5, or any 10 year cycle, to explain this rather dramatic impact. While it could be coincidence, it is also possible that I simply can’t find the explanation. Note that although the data covers a large number of years, the actual sample size is small.

I must admit that in 1995, I was extra bullish and was rewarded. I will be a little extra bullish in 2015, although I hesitate to suggest that anyone else should do the same. But here are the numbers.

Average annual returns since 1935:
11.0% = S&P 500 index
20.7% = year 3 of the election cycle
28.4% = years ending in 5
42.4% = year 3 + years ending in 5

0 = number of times year 3 was negative

Just an observation."

Also, look at http://www.seasonalcharts.com/zyklen_wahl_dowjones4j.html - Dow Jones Election Cycle, 4 Year Period 1897-2011 - and note that this year is roughly no real gain as it is the third year in the election cycle.

An appropriate bit of weirdness for Guy Fawkes Day.

Warmest Regards,

Allen

P.S. Bowler Bob (I can imagine you doing a soft shoe dance with cane and a bowler hat sort of like a cross between Charlie Chaplin and Gene Kelly) I just ordered "The Ivory Portfolio" fro Alibris.