November 9, 2016

Stock Market Likely to Decline in 2017

The stock market traded down 800 points overnight, but the real stock market did not open until 9:30 a.m. Wednesday November 9, the day after the election.

 

It opened up slightly before turning down. There may be some initial celebration of the Republican sweep, but America tends to be suspicious of new presidents, especially Republicans replacing Democrats in the White House. When this happens, the market tends to decline significantly:

 


The “Almanac Investor” has studied the presidential stock market cycle going back to 1833. In those 46 four-year cycles, the post-election year (like 2017 will be in this cycle) is the worst year of the four-year presidential cycle. Since 1833, the market has declined 24 times during the first year of the presidential cycle. It has risen only 19 of 46 first presidential years since 1833, with one year of no change.

The market tends to decline under a new president since the market likes to see predictability. A new president in the previously-out-of-favor party tends to bring surprises. But after a year or so, the market (and the voting public) realize that the president is not all-powerful. When the public realizes he can’t fulfill all his grandiose election-year promises, reality returns and the run from stocks to gold accelerates. Be prepared and buy some gold!

We can’t forget that China and Russia will test America’s new president with some expansionary moves, some saber-rattling and land grabs. There may be nuclear threats from North Korea, Pakistan or a revival of nuclear development in Iran. ISIS will expand deeper into Syria and Iraq, and companies in China and Mexico, among others, won’t submit to threatened trade war without retaliation. The fun has just begun.

Market update courtesy of Universal Coin & Bullion – By Mike Fuljenz.

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