Presidential Election Cycle Theory Definition
Yale
Hirsch defined this idea that the stock markets are weakest in the year
following a Presidential election. The
market improves after the first year and up until the next Presidential
election. This theory proved strong in
the first half of the Twentieth century; however the last fifty years appears
to disprove it. For example, during
President Franklin D. Roosevelt’s first year in office, the market was down by
27.3%. As opposed to the first year of
President Clinton’s second term, which showed a market performance up 35.9%.