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Ken Fisher for Forbes - Investors: Expect A Great Fourth Quarter

June 19, 2014 | About:
Holly LaFon

Holly LaFon

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Having never seen it described makes me love it more: Among the very least known stock market anomalies is the awesome Midterm Election Year Fourth-Quarter Effect.

Since 1925 the S&P 500 has risen in 19 of 22 midterm-election-year fourth quarters. That’s a whopping 86.4%. One of the other three wasn’t negative–but 0.0%. Hence it’s been negative only 9.1% of fourth quarters. One was merely -5%. Only once was it down much, -16.4% way back in 1930–during the crash. You have to love it.

Positive fourth quarters aren’t necessarily huge. They’ve varied from 2% to 21.3%, averaging 9.5%. But a 9.5% quarter ain’t chicken feed.

I’ve bet on political effects for decades, and some usually work. For example, years in the back half of a President’s term tend to be positive (also, by chance, 86% of the time). But note: A huge exception was 2008.

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