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Investment Strategies
Categories
- Value Investing
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Growth Investing
|- Income Investing
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Market Capitalization
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Momentum Investing
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Technical Investing
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Buy and Hold Strategy
- Buy What You Know
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Contrarian Investing
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Turnaround Investing
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Tobin’s Q
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Responsible Investing
- ADR's
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Global Investing
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The Dow Theory
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Odd-Lot Theory
- Election Cycle Theory
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Dow Dividend Theory
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Penny Stocks
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Initial Public Offerings
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Dollar Cost Averaging
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Drips
- Risk Tolerance
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Election Cycle Theory
The presidential
election cycle theory is a stock market timing strategy. It was believed
that the first two years of a newly elected president are spent on
implementing his election agenda, putting downward pressure on the economy
and stock prices. Eighteen months prior to the election, the economy would
be at its worst and stock market prices at their low point. Over the next
eighteen months, the focus changes to improving the economy in order to get
re-elected, resulting in the economy running at full throttle at election
time with stock prices higher. This theory has lost its following over the
years. What has taken its place is the statistic that the third year of a
presidential term is usually an up year for the stock market. Additionally,
the last year of a two-term presidency is usually a down year for the
market. |
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