Tabell’s Market Letter – November 16, 1979

TABELL'S MARKET LETTER 909 STATE ROAD. PRINCETON, NEW JERSEY 08540 DIVISION OF' MEMBER NEW YORk STOCK EXCHANOE, INC MEMBER AMERICAN STOCK EXCHANGE November 16, 1979 Political commentators have widely noted the recent tendency for presidential campaigns to – —- beginearlier -and -earlier-Indeed,- at – peIgning liaS-already begi.tn–in earnest W';-are-thus publishirig below', somewhat earlier than usual, our study of market behavior during presidential election years. The table shows, for each election year since 1900, the president elected and his party, followed by the average price for each month, expressed as a percentage of the previous December's close (i. e., 110 means the market was up 10 and 90 means it was down 10). Year President Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1900 McKinley R 101 103 lO4 105 100 98 98 99 97 100 108 114 1904 Roosevelt R 102 99 99 101 99 99 103 107 112 118 125 126 1908 Taft R 105 100 105 111 117 117 123 126 125 126 134 138 1912 Wilson D 100 99 lO2 106 105 105 106 109 109 109 108 103 1916 Wilson D 99 98 97 96 98 99 98 99 102 105 107 103 1920 Harding RII 99 91 97 96 91 89 89 86 89 89 85 77 1924 Coolidge R 103 104 102 100 99 101 101 113 112 110 115 119 1928 Hoover R 99 98 103 110 113 108 108 112 120 123 131 132 1932 Roosevelt D 103 101 102 76 66 59 63 89 102 88 87 82 1936 Roosevelt D 102 108 112 112 104 108 116 118 120 126 130 128 1940 Roosevelt D 99 98 97 98 85 76 80 82 86 87 88 85 1944 Roosevelt 1948 Truman D 102 101 105 101 105 109 112 110 108 111 110 115 D 97 92 94 101 106 110 108 104 103 106 100 99 1952 Eisenhower R 102 100 100 100 100 102 105 106 104 104 105 109 1956 Eisenhower R 97 98 104 105 103 102 107 106 103 102 100 102 1964 Johnson D D 102- -103- 105- i6i -i09 – -10-8 –11-1 –110 — ii1- R7 –;-1 113 – 115 –112 1968 Nixon R 98 94 92 99 101 104 104 101 105 108 109 110 1972 Nixon R 102 103 106 108 107 106 104 108 107 106 112 115 1976 Carter D 109 114 116 116 116 116 117 115 117 112 111 115 lncumbent party did not control Congress. lncumbent party not re-elected. The twenty years show an approximate normal distribution. Twelve are bull markets, three (1920, 1932 and 1940) are distinct bear-market years, and in five years the trend was flat. There appears to be a tendency toward a flat trend or moderate weakness in the first half. Eleven of the twenty years showed little market change through June. Indeed, only in the three years which evolved into bear markets was the first half action predominantly on the down- side. It is worthy of note that a downward bias tends to occur on two sorts of occasions, first, when the incumbent president loses the election, and, second, when the incumbent party does not control Congress. However, 1972 and 1976 were both exceptions to this latter rule and 1976, possibly due to its unusual circumstances, produced the second strongest first half on record. The first statistic suggests that the market may be a good forecaster of election returns. Only in 1976, of years when the incumbent lost the election, was the market up more than 5 in the first half. Thus early strength next year might provide heretofore missing comfort for President Carter. . The most consistent fact about election year markets, though, is It definite tendency toward a strong second half. Indeed, as the table shows, in 16 of the 20 completed years, the average price for December was higher than the average price for June. Even in two of the three bear markets, 1932 and 1940,the market rallied in the second half from the June lows. In 1912 and i976 the JuneDecemberdifference was mliiiScule-Oiify iri1920 and 1948 -were-there distinct declines from June to December. In terms of 1980, we have recently been suggesting that the market now finds itself in an upward cycle which is not likely to be completed before the end of that year. Thus second-half strength, regardless of irregularity which may be the outgrowth of recent near-term action, would be consistent with our current view of the cyclical picture. Dow-Jones Industrials (12 00 PM) 819.62 S & P Composite (12 00 PM) 104.15 Cumulative Index (11/15/79) 726.73 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL AWT sla No statement or e;.;preSSlon of opmion or any other motter herein contained IS, or Is to be deemed to bo, dlrcctly or mdlrectly, on offer or the SOIIC.totlon of on offer to buy or sell any seclJrlty referred to or mentioned The molter IS presented merely for the converenct of the subscriber While we believe the sources of our tnformo- lion 10 be reliable, we In no way represenl or guorantee the occuroy thereof nor of the sTatements mude herem Any OcTIOn to be tok.en by The suoscnber should be based on hiS own Investlgohon and mformatlon Janney Montgomery Scott, Inc, as a corporation, cnd Its or employees, may now have, or may loter take, POSitions or trades In respect 10 any SeCUrities mentioned In thiS or ony future Issue, ond such position may be different from any views now or hereafter eypressed In thiS or any other Issue Janney Montgomery Scoli, Inc, which IS registered With the SEC os on Investmenl adVisor, may give adVICe 10 lIs ,nvestment adVISOry and othel customers Independently of ony statements mode tn thiS or In any other Isue further information on any mentioned herein IS aVailable on request