{"id":659,"date":"2011-02-25T15:49:19","date_gmt":"2011-02-25T20:49:19","guid":{"rendered":"http:\/\/thequicksliver.wordpress.com\/?p=659"},"modified":"2011-02-25T15:49:19","modified_gmt":"2011-02-25T20:49:19","slug":"2-25-11-the-incumbent-leap","status":"publish","type":"post","link":"https:\/\/quicksilverhg.com\/thequicksliver\/2-25-11-the-incumbent-leap\/","title":{"rendered":"2.25.11 The Incumbent Leap"},"content":{"rendered":"

<\/a><\/a><\/p>\n

To make money in the stock market these days, you have to take a leap of faith.\u00a0 Or wait until next year.<\/p>\n

<\/a><\/p>\n

<\/a><\/a>Stock watchers have observed that Leap Years outperform Average Years by, um, leaps and bounds.\u00a0 If you look at the growth of the S&P 500 going back to 1926, you’ll find an interesting and recurring pattern of growth through the months of an Average Year.\u00a0 Almost all months show a return on investment, with the average month seeing an annualized return of 12%.\u00a0 July has traditionally shown twice that level of growth at 24%, and September is the only perennial loser, at an average of -10%.\u00a0 In other words, in an Average Year, stocks grow in value for the first 9 months, especially in July, fall back in September, and grow again until December.<\/a><\/a><\/p>\n

<\/a><\/a><\/p>\n

But every fourth year, those statistics go out the window.\u00a0 In the average Leap Year, stocks start out slow, and actually lose 16% of annualized value in April and May.\u00a0 But then they, um, leap.\u00a0 29% annualized growth in June.\u00a0 38% in July.\u00a0 A ridiculous 57% in August.\u00a0 And positive growth for the rest of the year (including in the normal loser month, September).\u00a0 The average month in a Leap Year shows an annualized return of over 16%.\u00a0 In other words, Leap Years start out slower but then leap over the growth rate shown in an Average Year.<\/p>\n

<\/a><\/p>\n

<\/a><\/a>How can this be? (Hint: it’s got nothing to do with February 29.) It has to do with the fact that Leap Years are also Election Years, and sitting politicians like to leap into their next terms.\u00a0 The Stock Trader’s Almanac explains, in an article with the subtle title, “”How the Government Manipulates the Economy to Stay in Power,” the Fed likes to stimulate the economy right before elections, so voters go to the polls feeling flush.\u00a0 They suddenly forget the pain of the last term. \u00a0Which, of course, favors incumbent politicians.\u00a0 And which, of course, piles up a new deficit which has to be dealt with in the next term.\u00a0 But that’s OK, politicians have until the next Leap Year to deal with it, at which point they buy the voters off again.<\/p>\n

<\/a><\/a><\/a><\/a>But as we approach 2012, you gotta think things will be different, right?\u00a0 It’s time for belt tightening.\u00a0 The President says so, as do the Republicans.\u00a0 And they know we’re not, um, stupid.\u00a0 We’ve entered a new era, with responsible politicians who, um, do the right thing.\u00a0 No financial shenanigans.\u00a0 Right?<\/p>\n

<\/a><\/p>\n

<\/a><\/a>Um, yeah.\u00a0 Believing THAT would take a real leap of faith.<\/p>\n","protected":false},"excerpt":{"rendered":"To make money in the stock market these days, you have to take a leap of faith.\u00a0 Or wait until next year. Stock watchers have observed that Leap Years outperform Average Years by, um, leaps and bounds.\u00a0 If you look at the growth of the S&P 500 going back to…\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[6],"tags":[385,611,621,720,1173],"class_list":["post-659","post","type-post","status-publish","format-standard","hentry","category-6","tag-election","tag-incumbent","tag-investments","tag-leap-year","tag-stock-market"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quicksilverhg.com\/thequicksliver\/wp-json\/wp\/v2\/posts\/659","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quicksilverhg.com\/thequicksliver\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quicksilverhg.com\/thequicksliver\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quicksilverhg.com\/thequicksliver\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/quicksilverhg.com\/thequicksliver\/wp-json\/wp\/v2\/comments?post=659"}],"version-history":[{"count":0,"href":"https:\/\/quicksilverhg.com\/thequicksliver\/wp-json\/wp\/v2\/posts\/659\/revisions"}],"wp:attachment":[{"href":"https:\/\/quicksilverhg.com\/thequicksliver\/wp-json\/wp\/v2\/media?parent=659"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quicksilverhg.com\/thequicksliver\/wp-json\/wp\/v2\/categories?post=659"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quicksilverhg.com\/thequicksliver\/wp-json\/wp\/v2\/tags?post=659"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}