Tabell’s Market Letter – April 12, 1991
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TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 085435209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC 1609) 9872300 April 12, 1991 It OC;lUrred \L-Us.l'Ce!ltly lhat w.enow. find. orsel…es .just oer0 18 monthsaway from an election, yet there has been precious little media-coinmellt regarding presidential politics, a phenomenon not unrelated, we suppose, to President Bush's standing in the polls. As time goes on, there will, undoubtedly, emerge much discourse on the stock marker s behavior in election years, so we are, with this discussion, getting our licks in early. The table at left shows the percentage change in the DJIA for each election year, and Years/ o 1 2 3 the three years follOWing it, in this century. An apparent upward bias in the third year after an 1900 7.00 -8.71 -0.40 -23.61 election (such as 1991) and in the election year 1904 41.72 38.20 -1.92 -37.73 itself (such as 1992) has been noted. Indeed, 1908 1912 1916 1920 1924 1928 1932 46.63 7.57 -4.19 -32.90 26.16 48.22 -23.07 14.97 -10.35 -21.71 12.72 30.00 -17.17 66.69 -17.86 -5.42 10.51 21.74 0.34 -33.77 4.14 0.40 81.66 30.45 -3.25 28.75 -52.67 38.53 the Dow has been up in 17 of 22 pre-election years and in 16 of 23 election years. The mean change has been 9.3 in election years and 10.5 in pre-election years, well above the overall mean of 6.96. When standard tests of statistical 1936 24.82 -32.82 28.06 -2.92 significance are applied, though, these results 1940 -12.72 -15.38 7.61 13.81 are less than surprising. It must be remembered 1944 12.09 26.65 -8.14 2.23 that, of the 91 years in the table, 56 have been 1948 -2.13 12.88 17.63 14.37 up and only 35 down. There exists, therefore, a 1952 8.42 -3.77 43.96 20.77 fair degree of probability, well over 10, as a 1956 2.27 -12.77 33.54 16.76 matter of fact, of selecting from this group, a 1960 -9.34 18.71 -10.81 17.00 17-up, 5-down sample. Likewise, since the 1199668 –.144….2577 1-1051898-!B.49.4821,5-6-.101,a.fta;ft;;IJH of-t..h- a-..'.;…u-eoI's\..'d. -(The-ntandard– . 1972 14.58 -16.58 -27.57 38.32 deVIation, for thoe mterested m sch thmgs, is 1976 17.86 -17.27 -3.15 4.19 22.6), the selection of a sample WIth a 10.5 1980 14.93 -9.23 19.60 20.27 mean is not at all improbable. 1984 -3.74 27.66 22.58 2.26 There Is more significance, although a great 1988 11.85 26.96 -4.34 deal less apparent justification, for the pattern —— —— —— shown in the table below, the so-cslled decennial Average 9.34 4.58 3.57 10. SO pattern first noted by Edgar Lawrence Smith. The Years Up 16 11 12 17 table shows the changes for years ending in each Years Down 7 12 11 5 of the digits zero through nine, and the fact that all years in this century ending in five have been up, usually by substantial amounts, has been often remarked. There is a less than 2 probability that this could have occurred purely by chance, and a probability of less than 0.1 that a sample of nine items with a mean of 34.74, almost five times the population mean, could have been drawn. There also appears to be some minor significance attached to an upward bias for years Year/ o 1 2 3 4 5 6 1 6 9 1900 1.00 -6.71 -0.40 -23.61 41. 72 38.20 -1. 92 -37.13 1910 -17.86 0.40 7.51 -10.35 -5.42 61. 66 -4.19 -21. 71 1920 -32.90 12.72 21. 74 -3.25 26.16 30.00 0.34 28.75 1930 -33.77 -52.61 -23.07 66.69 4.14 36.53 24.62 -32.82 1940 -12.72 -15.36 1.61 13 .61 12.09 26.65 -8.14 2.23 1950 11.63 14.37 8.42 -3.11 43.96 20.71 2.27 -12.11 -1960 1970 1980 -9.34 18.71 -10.61 11.00 14.51 10.66 -16.94 15.20 . 4.82 6.11,. 14.58 -16.58 -27.57 ,38.32 ,11.66 -11.7.7 14.93 -9.23 19.60 20.21 -3.74 27.66 22.56 2.26 1990 -4.34 —— —— Average -6.65 -3.74 5.03 6.69 11.17 34.14 3.65 -6.21 Years Up 4 5 64 6 95 4 Years Down 6 4 35 3 04 5 46.63 14.91 10.51 30.45 46.22 -17.11 26.06 -2.92 -2.13 12.88 33.54 16.16 4.21 -15.19 -3.),5 'lo9 11. 65 26.96 19.16 7 2 7.88 6 3 ending in eight, and a downward bias for those years ending in zero. Since 1990 has Just passed, however, and 1995 is a ways away, these figures are, at the moment, only of academic interest. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow Jones Industrials (12 00) S & P 500 (1200) Cumulative Index (4111191) 2901.48 377.58 6045.08 AWTjb No statement or expression of opinion or any other matter herein contained IS, or IS 10 be deemed 10be, directly or indirectly, an offer or the solicl1atlon of an offer to buy or sell any security referred 10 or mentioned The matter IS presented merely for the convemence of the subscnber While we believe the sources of our InformatIOn to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements made herein Any action to be taken by the subSCrIber should be based on hiS own investigatIOn and information Delalleld, Harvey, Tabellinc ,as a corporation and Its officers or employees, may now have, or may later take, posl1lons or trades In respect to any secuntJes mentIOned In thiS or any future Issue, and such posltlon may be different from any views now or hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabellinc , which IS registered With the SEC as an Investment adVisor, may give adVice to I1s Investment adVISory and other customers Independently of any statements made In thiS or In any other Issue Further Information on any secufl\y mentioned herein IS available on request