|  Yale Hirsch is Chairman of The Hirsch Organization, an independent investment research and publishing organization. Hirsch publishes two monthly newsletters, the annual Stock Trader 's Almanac, other books and special reports , and a daily market timing hotline. Its focus has always been on the individual investor and all of its recommendations are suited to individual investors, including those with small stakes. Much of Hirsch's research is also used by professionals, especially his famous recurring market pattern studies and discoveries. A stock trader's almanac -
As January goes, so goes the year - only three significant errors in 51 years . Since 1950, the January Barometer has predicted the annual major trend of the stock market with amazing accuracy. Based on whether Standard & Poor's composite index is up or down in January, most years (excluding six flat years 1956, 1970, 1978, 1984, 1992 and 1994,) have, in essence, followed suit. Of three significant errors 1966, 1968, and 1982, Vietnam affected the first two. However, there were no errors in odd years when new congresses convened. Bear markets began or continued when January's had a loss. The six flat years switched directions in the year's final months. -
Invest in the market between November and April each year. My 'best six months' discovery racks up 99.6% of all gains compared to 0.4% for the other six months of the year. Since 1950 an excellent strategy has been to invest in the market between November 1st and April 30th each year and then to switch into fixed income securities for the other six months of the year. I discovered this strategy in 1986. Investing $10,000 and reinvesting proceeds during all November-April periods since 1950 would have gained $415,890, outperforming May-October's puny $1,743. As sensational as these results are, they can be more than doubled with a simple timing oscillator. -
Gains in third and forth years of Presidential terms triple those of first and second years. Stock prices have been impacted by the presidential election cycle for 170 years, gaining 722.4% in the second halves of presidential terms vs. 251.7% in the first halves . Nine major bottoms occurred during the last ten midterm-election years. -
If Santa Claus fails to call, bears may come to Broad and Wall. Santa tends to come to Wall Street nearly every year, bringing a short, sweet, respectable rally within the last 5 days of the year and the first 2 in January. This has been good for a gain of 1.7% on average in the past half century, a theoretical 80% annual rate of return. Santa's failure to show usually preceded bear markets or times stocks could be purchased at much lower prices later in the New Year. The bear market that began in 2000 was preceded by a 4.0% loss during the holiday period. -
We tend to pay the piper in post-Presidential election years. Politics being what it is, incumbent administrations during election years try to make the economy look good to impress the electorate and tend to put off unpopular decisions until the votes are counted. This produces an American phenomenon - the Post-Election Year Syndrome. The year begins with an Inaugural Ball, after which the piper must be paid. Americans have paid, and paid, and paid in the past. It is rare indeed when a victorious candidate succeeds in fulfilling his winning campaign promise of peace and prosperity . In the past 22 post-election years, 3 major wars began, 4 drastic bear markets started, and 10 less severe bear markets occurred or were in progress. Only in 1925 and the previous 3 post-election years were American blessed with peace and prosperity. -
Buy stocks at mid- term election-year lows. In the last ten mid-term election years, bear markets began or were in progress six times in a row before the onset in 1982 of the biggest bull cycle in Wall Street history. A hypothetical portfolio of stocks bought at midterm election-year lows since 1914 has gained 50.2% on average when the stock market reached its subsequent highs in the following pre-election years. A swing of such magnitude is equivalent to a move from 10,000 to 15,000. Pretty impressive seasonality ! There is no reason to think the quadrennial Presidential Election/Stock Market Cycle will not continue in 2002-2003. In which case the Dow could possibly gain 5000 points from its 2002 mid-term bottom to its high in pre-Presidential election year 2003. -
First trading days of the month sizzle. Between September 2, 1997 (Dow 7,622.42) and July 6, 2001 (Dow 10,252.68) the Dow Industrial average gained a total of 2,630.26 points. During this 47-month period, first trading days of the month gained an incredible 2,662.51 points. In stark contrast, all the other remaining trading days (923 of them) lost 32.25 points. What this means is that the average gain for each of these 47 first trading days was 56.7 points, compared to a loss of a third of a point per day for the other 923 days. On an annualized basis that's roughly 265% vs. a negative return for the entire year for all other days. -
So-called summer rallies are a farce - it is the weakest of all the seasons. In any year when the market is a disappointment, you hear talk of a summer rally. Such a big deal is made of the 'summer rally' that one might get the impression the market puts on its best razzle- dazzle performance in the summertime. Nothing could be farther from the truth! Not only does the market rally in every season of the year, but it does so with more gusto in other seasons. Winters in 38 years averaged a 13.7% gain as measured from the low in November or December to the first quarter closing high. Spring was up 10.6% followed by fall with 10.3%. Last and least was the average 9.6% 'summer rally'. -
The only 'free lunch ' on Wall Street is served in December. Several shrewd observers note that many depressed issues sell at 'bargain' levels near the close of each year as investors rid their portfolios of these 'losers' for tax purposes. Stocks hitting new lows for the year in late December tend to outperform the market handsomely by February 15th in the following year. Select stocks that are making mid-December lows by first eliminating preferred stocks, closed-end funds, splits , new issues, etc. Then buy stocks that are down the most. They do tend to bounce back more than the market after tax-selling season is over. -
Down Triple-Witching Weeks trigger more weakness in the week after. Triple-Witching Week (TWW) refers to expirations in three vehicles: S&P futures ; put and call options on other indices; and options on stocks. Down TWWs often lead to a down market the following week. Since 1991, of 13 down TWWs, 11 were also down in the following week. www.stocktradersalmanac.com 'The biggest mistake individual investors make is concentrating their portfolios, and the greatest sin of all is holding an excessive portion of your wealth in the stock of the company you work for.' ”Richard Thaler and Russell Fuller | |
