The Stock Traders’ Almanac reports that there have been six previous presidents that served a seventh year in office and that the average return for the Dow in those years averaged 13.00% with 1939 as the only year that ended in the red. A seventh year, of course, is also a pre-election year which is expected to be very bullish.
But markets don’t stop just because the calendar year comes to an end. The Wilson peak in November 1919 started a decline which didn’t end until Aug 1921, and that produced a massive loss of 47%.
Roosevelt’s seventh year peaked in September 1939 (after a big dip which recovered to almost exactly where it began the year) and didn’t stop falling until April 1942 producing a loss of 40%.
The year 1959 was the seventh year of Eisenhower’s time in the oval office. The Dow didn’t peak until January 5, 1960 and bottomed that Oct with a loss of “only” 17%.
The next seventh year of a presidential term didn’t occur until Reagan in 1987. That’s year’s decline was sharp and swift lasting only from August to October but still wiping out 36% of the Dow.
The year 1999 was the seventh year of the Clinton administration. “Friends of Bill” will say the Dow topped in August and bottomed in Oct producing a loss of only 11%. Others will point to the Eisenhower peak in January of the following year and insist the Clinton period be examined in a like manner. In that case, like Eisenhower, the Dow topped in January and didn’t stop declining until Oct 2002 producing a 38% loss.
The year 2007 was the seventh year for G.W. Bush. The Dow peaked in October and fell 54% before finding a bottom in March 2009.
This year, 2015 is the seventh year for Obama. Whether it begins this year, or waits until after the first of next year, it would seem that a big decline is coming.
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