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Presidential Election Cycle Theory

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%.

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