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Masters in Business

Jeff Hirsch on Presidential Market Cycles

Jan 29, 2025
Jeff Hirsch, Editor of the Stock Trader’s Almanac and author of "Super Boom," dives into the dynamics of presidential market cycles. He explains how newly elected presidents can significantly influence market performance, especially in their third year. The discussion unveils surprising trends, such as the Dow’s behavior during election years and how economic conditions play a role. Hirsch also shares strategies for investors to navigate these cycles, emphasizing the importance of a long-term perspective during turbulent times.
14:14

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Quick takeaways

  • Presidential cycles greatly affect market performance, with the third year typically showing stronger gains as governments aim to sway voter approval.
  • Midterm years often experience market challenges due to sluggish performance and geopolitical tensions, emphasizing the need for strategic investment adjustments.

Deep dives

The Importance of Presidential Cycles in Market Performance

Presidential cycles significantly influence financial markets, particularly as presidents aim to secure voter approval during their terms. The theory, developed by Yale Hirsch, identifies patterns where the third year of a presidential term typically sees stronger market performance, driven by governmental efforts to stimulate the economy before elections. Historical data indicates that post-election years have improved dramatically since World War II, with average gains for the Dow reaching 17.2%. This trend suggests that with an upcoming presidential election, investors can anticipate bullish conditions leading into 2025.

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