Tomorrow, September 30th of a mid-term year, is a big day. This marks the market's historic low point during the Presidential Election Cycle. Historically, September 30 of the mid-term year is the best time to buy stocks.
A few years ago, I crunched the entire history of the Dow from 1896 to 2007. Here's what I found:
Historically, the Dow has gained an average of 24.1% from September 30 of the mid-term election year to September 6 of the pre-election year. This means that nearly two-thirds of the Dow's four-year gain (24.1% of 36.7%) comes in less than one-quarter of the time. That's a pretty stunning stat.
After September 6 of the pre-election year, the Dow has historically pulled back 5.2% to May 29 of the election year. After that, it puts on a nice 23.2% climb to August 3 of the post election year. Then trouble starts. After September 3, the Dow then pulls back 5.6% and we're back at our starting point, September 30 of the mid-term election year.
By the way, if you take out some of the unpleasantness from 1929 or 1987, it really alter the trend of long-term chart terribly much.
Posted by Eddy on September 29th, 2010
I started this Web site to help individual investors. I have to admit that I love the stock market. I think I must be an addict. In my opinion, the stock market is one of the greatest inventions in history. (more)
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