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Back in the 1/20/2009 blog I looked at inauguration day returns. I wondered at the time whether a new president brought about new hope and optimism for the market. I have decided to update that study today.
I limited the instances to only those inaugurations where a new president was entering office. I don’t think re-elections carry a sense of “new hope” the way a new president does. I also eliminated inaugurations of Presidents that weren’t elected (Ford in ’74, Johnson in ’63, Truman in ’45, and Coolidge in ‘23). I just don’t believe the same sense of excitement is generated by a replacement as by a newly elected president. The remaining presidents and their inaugurations can be found in the table below.
First, I found it interesting that the wonderful speeches and overall positive vibes surrounding a new president did NOT translate to a strong Inauguration Day performance. (You could throw out Roosevelt and G.W. Bush here, since the market was not open on the days they were inaugurated.) I’ll also note that Donald Trump could (and certainly would) claim he gave the greatest Inauguration Day speech of the last 100 years, since the 0.48% rise on that day was the best of any president on the actual Inauguration Day. It could also be claimed that Obama gave the worst speech in 100 years, since the Dow tumbled 4% on the day of his inauguration.
I’ll also note that looking out over the next 10 and 75 days the market did often seem to embrace the new hope that comes along with a new administration. Harding in 1921 is the only one on the list that saw the market more than 3.5% lower 75 days out. Meanwhile, there were 6 instances where the market was more than 3.5% higher.
Lastly, I’ll note that the seasonal analysis done here is different than the new Seasonality Calendar features we have. I’d encourage you to learn more about the new Quantifiable Edges Seasonality Calendars .
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As of this writing the Quantifiable Edges blog has published over 185 posts related to market seasonality. Seasonality can be looked at many different ways. You can factor in things like the day of the week/month/quarter/year. Or the week of the month/quarter/year. Or special days, like market holidays or Fed Days. Seasonality can take many forms, and since 2008 I have published a lot of edges related to seasonality.
In the Quantifiable Edges Market Timing Course I looked at longer-term seasonal influences. I featured the Best/Worst 6 Months of the year, and the Presidential Cycle as longer-term seasonal factors.
Over the years I have also privately tested a number of systems that utilized seasonality. And now I have decided to share the Quantifiable Edges Seasonality Calendars. The seasonality calendars utilize multiple inputs that I have found to be helpful over the years. The statistics they produce are based on rolling lookbacks of similar seasonal setups.
Seasonality Calendars are now available as separate subscription at Quantifiable Edges, but we have also included them with all Gold and Silver subscriptions, at no additional cost.
The current list of indices with available Seasonality Calendars can be found below:
The video below provides a short intro to the Calendars, along with the research and resources that come with them:
VIDEO
I’ve posted and updated the “Twas 3 Nights Before Christmas” study on the blog here several times since 2008 . The study will kick in at the close today (12/22). This year I will again show the Nasdaq version of the study. While all the major indices have performed well during this period, the Nasdaq Composite has some of the best stats.
The stats in this table are strong across the board. An average year posted a gain of about 2.5% over the next 8 days. The note at the bottom shows the reliability of some kind of bounce has been nothing short of incredible. Traders may want to keep this study in mind over the next several days.
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In November of 2019 I decided to join my long-time friend Jeff Pietsch and become a part of Capital Advisors 360, LLC. Here’s why.
I first began trading full-time in 2001. During the late 90s I was a part-time trader while working a full-time sales job. But sales was not my passion. And the better I got at trading, the more I dreamed about quitting sales altogether and trading for myself. So in September, 2001 I set up an investment partnership. I put my own money into the partnership account with a few friends and family members. Hedge funds were the rage and so I adopted the partnership structure. In 2012 the rules around investment partnerships became stricter and more regulated. They basically prevented me from taking on new investors without changing my business model.
I ran the fund for 18 years. From time-to-time I thought about expanding, but the prospect of going through registrations, subjecting myself to greater oversight, and having to keep up with various compliance issues and other legal and regulatory work seemed daunting.
In 2011 my friend Jeff Pietsch started Eastsound Capital Advisors (now CA360) – a state registered investment advisory in Washington. Over the years he would occasionally ask me when I was going to get registered, and I would laugh it off. But in 2019 he pointed out a few things that struck a chord.
For one, the structure I’d set up way back in 2001 was antiquated at that point, and it was also expensive to maintain! Below are a few points we hashed out that suggested my clients would be better off if I managed their money in separately managed accounts, rather than within a traditional fund structure:
Partnership expenses would go away. The biggest of these expenses was accounting, but it also included data, software, and other costs attributable to the partnership structure.Accessibility would increase greatly. We only valued the partnership on a quarterly basis and so people were only able to withdraw funds once a quarter. Same thing with new investments. With separately managed accounts, clients are able to add or withdraw funds at any time. There are no “partnership” holdings that are impacted that would require additional valuations and accounting.Transparency improves without the partnership. I would generally send a monthly report out to clients letting them know how things were going. Then they would get a quarterly statement generated by the accountant. But with separately managed accounts, clients are be able to login whenever they want to see balances, transactions, gain/loss and any other information.I can customize the aggressiveness and risk profile for each individual client. Even if clients are utilizing similar strategies, one client could use leverage and allocate more aggressively, while another can execute with more conservative position sizing. This is not possible within a partnership account. And over the years, clients had shown interest in having me manage more than just an “aggressive” slice of their portfolio.With separately managed accounts, I never have to take custody of any funds. Clients deposit right into their own accounts and withdraw right from their own accounts at their choice of utilized brokerages, currently including Charles Schwab, TD Ameritrade, and Interactive Brokers. When running a partnership, for a new deposit, I would need to take a check or a wire into the partnership’s checking account, and then move it from there to the brokerage account. And then I would need to do the reverse to send clients money they wanted to withdraw. Taking me out of the equation is likely viewed as a positive for clients, but it is definitely viewed as a positive for me. I no longer have to worry about sending wires, or making sure checks arrive and clear when they are supposed to. I hated being the “middle man”, and with separately managed accounts, and now with custodial accounts I don’t have to be.Software and brokerage services have changed a lot since 2001 as well. With custodians like Interactive Brokers, I can now use their modeling capabilities to mimic the partnership trades I used to do at relatively low cost. But instead of the trade going to one partnership account, it gets automatically divided among all clients participating in the “model”.
Between my clients’ expanding needs, the lower expenses, better accessibility and transparency, the ability to customize risk, the better custody solution, and the technological advances in the industry that would allow me to easily handle trading in many different accounts at once, I decided to make the switch. And best of all, by going with CA360, I did not have to tackle all the regulatory and compliance headaches on my own. Plus, I got to work closer with Jeff.
It took a while for everything to get completely setup, but after several months, I officially became registered in Massachusetts as an investment advisor representative of CA360, and I could not be happier about it.
As a fiduciary advisor, I am now able to help clients achieve their personal goals and objectives, whether they be with the more active Quantifiable Edges approaches I have honed over the decades, or in combination with additional approaches to help diversify their investments with multiple managers and methodologies.
Note, this post was originally published on the Capital Advisors 360 website .
I have written many times over the years about the bullish tendency of the market during opex week in December. I used to refer to it as “The Most Wonderful Week of the Year”. And it was…up until 2018. So below is an updated look at the stats and profit curve for owning SPX from the close of the Friday before December opex to the close on December opex.
That is a 7% loss you are looking at in 2018. So that will likely take a few more years to recover. But we are entering the time of year when the market typically has the seasonal winds at its back. And despite the 2018 December collapse, that is something traders may want to keep in mind this week (and even a bit longer).
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