Mar

31

Herman Ehrenberg

Herman Ehrenberg (October 17, 1816 – October 9, 1866) was a surveyor and Texian soldier who was one of the few survivors of the Goliad Massacre. During his escape, he purportedly yelled, "The Republic of Texas forever!" which popularized the catchphrase "Texas forever!".

A native of Germany, Ehrenberg joined the military volunteer unit the New Orleans Greys and fought against Mexico in the Texas Revolution. His memoirs of the Revolution were published in Germany in the 1840s and translated into English in the 20th century.

Ehrenberg created the first map of the Gadsden Purchase. Ehrenberg, Arizona, is his namesake.

Texas Blood: Herman Ehrenberg's Odyssey in the Texas Revolution

More than an eyewitness, Ehrenberg relates the details of the fall of the Alamo and the defeat of Santa Anna at San Jacinto as told to him by his contemporaries at the time. He brings us details of life on the Texas frontier, and the conditions of service in the Texas army. His is one of the rare accounts that, as the old expression goes, brings history alive. Herman Ehrenberg published his epic story in 1843, in German. It was translated into English in 1925, then left to languish in a thesis collection at the University of Texas. Though diligent scholars have referred to the work for decades, this is the first full English translation of Ehrenberg’s work designed for easy access by history buffs and academics alike.

Mar

30

From The Mind of Bill JamesThe Mind of Bill James by Scott Gray, which I've been reading:

All things in baseball tend to return to their previous form. A team whose record improves one year will tend to decline the following year, and vice versa. In 1980, for example, only five of the twenty-six teams moved in the same direction in which they moved in 1979. It also applies to individual players. Bill found a way to express not merely the statistical principle of regression to the mean, but also what he called the 70/50 rule. Seventy percent of teams that decline in one year will improve the next; 70 percent of teams that improve will decline; and in all cases the amount of rise or fall is about 50 percent, so that a team twenty games over .500 one year would be ten games over .500 the next. (The percentages are much different for very big or very small improvements and declines.) “These were not things that I had expected to find,” Bill wrote. “Weaned on the notion of ‘momentum’ since childhood, I had expected a team which won eighty-three games one year and eighty-seven the next to continue to improve, to move on to ninety; instead, they consistently relapsed. Half-expecting to find that the rich grow richer and the poor grow poorer, I found instead that the rich and the poor converged on a common target at an alarming rate of speed.

It also applies to individual players. Bill found a way to express not merely the statistical principle of regression to the mean, but also what he called the 70/50 rule. Seventy percent of teams that decline in one year will improve the next; 70 percent of teams that improve will decline; and in all cases the amount of rise or fall is about 50.

Steve Ellison writes:

From my experience, I think the S&P 500 is less mean reverting in 1- to 2-week timeframes now than it was in the mid-2010s. On the other hand, the presidential election cycle pattern has been spot on since the beginning of bearish midterm election year 2022.

Eric Lindell comments:

These data pertain to relative performance — eg, a team's record relative to other teams. For absolute gauges — like how much I weigh on a diet, there's no such reversion to mean.

Kim Zussman responds:

Funny stuff! For asset managers everything is relative. For their customers (without yachts), it is absolutely absolute.

Where Are the Customers' Yachts?: or A Good Hard Look at Wall Street

Humbert H. agrees:

And that’s why people should not entrust their assets to asset managers, unless these people suffer from some sort of emotional instability and can’t handle losses without some stranger pretending to care.

Mar

29

Weekend reading

March 29, 2024 | Leave a Comment

Recent list recommendations:

From Zubin Al Genubi:

The New Money Management: A Framework for Asset Allocation, by Ralph Vince.

The Crowd: A Study of the Popular Mind, by Gustave Le Bon.

The Crowd. Must read. In crowds individual lose their intelligence, morals, and judgement and a new entity acts without credulity, irritably, and subject to whims, heroism and depravity.

1177 B.C.: The Year Civilization Collapsed

William Huggins adds:

I enjoyed 1177 BC a few years back as it gave a general overview of the geopolitical state of play towards the end of the Bronze Age. It summarized most of the theories underpinning the "bronze age collapse" which occurred around that time and left less than half the "civilized" world in the state it had been a century before. Doesn't offer much in terms of new evidence but it a decent quick read.

From Nils Poertner:

Tech Stress: How Technology is Hijacking Our Lives, Strategies for Coping, and Pragmatic Ergonomics

Tech Stress offers real, practical tools to avoid the evolutionary traps that trip us up and to address the problems associated with technology overuse. You will find a range of effective strategies and best practices to individualize your workspace (in the office and at home), reduce physical strain, prevent sore muscles, combat brain drain, and correct poor posture. The book also provides fresh insights on reducing stress and enhancing health.

Mar

26

Timeless advice

March 26, 2024 | Leave a Comment

timeless advice from Frank Crampton, one of the most successfull self-made men of the early 20th century:

I should take jobs that would teach me something, and never one I thought I wouldn't like. Most important was not to stay on a job too long, three months was about right but never longer than four…

Deep Enough: A Working Stiff in the Western Mine Camps

Vic's twitter feed

Mar

25

Interesting to learn that Gates and Arthur Bryant's trace their lineage to the original BBQ entrepreneur. As a KC native I'm biased, but it really is the best city for BBQ. Although plenty of good BBQ can also be found in TX and Memphis.

How did Kansas City become Barbecue City, USA? KCQ cooks up a delicious tale

“What’s your KC Q” is a joint project of the Kansas City Public Library and The Kansas City Star. Readers submit questions, the public votes on which questions to answer, and our team of librarians and reporters dig deep to uncover the answers.

Big Al offers:

More BBQ history:

Barbecue in Memphis has a rich history with deep roots

Mapping Texas Barbecue History

A Barbecue Nerd’s Guide to the Most Historic Joints in Texas

St. Louis BBQ & Its History

The History of BBQ in St. Louis

And for anybody travelling, here is some information on upcoming BBQ competitions and festivals in the US:

Barbecue News: Event Calendar

Check out 10 of the Best BBQ Festivals in the U.S.

BBQ Competitions

Northeast Barbecue Society: Event Calendar

Rocky Mountain BBQ Association

And per Jeff's comment:

8 Restaurants That Prove Arkansas Barbecue Is Here To Stay

Jeff Watson adds:

This place has the best BBQ in Arkansas, and they’ve only been around for 10-12 years:

Face Behind the Place: Susie Powell of Hoots BBQ & Steaks

Mar

24

An alternate understanding of a market being at all time high (market reaching new prices it has never encountered) is this: "Everyone that has ever bought that stock or instrument is now in profit". What might be the psychological implications of this?

Kim Zussman comments:

It is possible (and probable) to buy, then sell after a decline and stay out only to see it reverse and go up further. This (timing) is one reason it is so much easier to do better with B/H than trading.

Big Al adds:

The other advantage to B&H is that the opportunity cost viz time/attention required is basically zero. I have looked at various index timing approaches and have not found anything that beats B&H, especially when considering the vig and opportunity cost. However, should one need to scratch the itch, timing strategies may work better with individual stocks. But again, opportunity cost.

Humbert H. writes:

I've always been believer in B&H vs. trading. But even in B&H the debate between indexing and individual stock selection never dies. I don't like indexing, but I don't have a mathematical basis for that. It's a fundamental belief that buying things without any regard to their economic value has to fail in time, at least relative to paying some attention to it.

Zubin Al Genubi adds more:

Another aspect of buy and hold that Rocky pointed out is the capital gain tax severely eats into returns. The richest guys hold for years and have only unrealized untaxable gains.

Art Cooper agrees:

There was an excellent article in the Jan 7, 2017 issue of Barron's by Leslie P. Norton on VERY long-lived closed end mutual funds which have surpassed the S&P's performance. They have all followed buy and hold strategies.

Michael Brush offers:

Far more money has been lost by investors in preparing for corrections, or anticipating corrections, than has been lost in the corrections themselves.
- Peter Lynch

Steve Ellison brings up an important point:

And yet trading is one of the focal points of this list. The way I square this circle is to keep most of my trading account in an equity index fund at all times. When I think I have an edge, I make trades using margin.

Larry Williams writes:

B&H is the keys to the kingdom, but…the massive fortunes of Livermore were short term trades despite his comment about sitting on your hands. Even the current high performers, Cohen, Dalio, Tudor etc use market timing. When I won world cup trading $10,000 to $1,100,000, it was all about timing and wild crazy money management. One approach wins big the other wins fast. A point to ponder.

Bill Rafter writes:

What we found in studying only the SPX/SPY is that in the long run a buy-and-hold yielded 9.5 percent compounded annually. That was from 1972 to recent. Our argument is that studies before 1972 are flawed. That 9.5 was great considering there were several collapses of ~50 percent. However if you could just eliminate the collapses you could raise the return to 13.5 percent compounded annually.

Eliminating the down moves did not involve prescience. You did not need to forecast recessions, only identify them when you were in one. That was not difficult, and timing was not a critical as one might think. We identified several algos that worked well.

When you were out of equities, you could either simply hold cash, or go long the 10-year ETF. The bonds were better, but not by much. Interestingly, long term holding of bond ETFs yielded low single-digit returns. Best avoided. Which also means that the Markowitz 60/40 strategy was a sub-performer.

Taxes are investor/vehicle specific. For example, if you use a no-tax vehicle, there are no taxes. Regarding turnover, there are very few transactions, as there are very few recessions. The strategy is basically B&H, but with holidays.

Asindu Drileba has concerns:

My problem with buy & hold Is that it has no risk management strategy. If you bought the S&P 500 in 1929 for example during the wrong month. It took you 25 years i.e until 1954 not even to make profit, but just to break even. The real question is, how do you know your not investing in a market path that will take 25 years just to break even?

Humbert H. responds:

That’s why, dollar cost averaging. I don’t think anyone thinks buy once in your lifetime and never interact with the stock market ever again. I think if you had averaged in monthly or quarterly from the summer 1929 through summer 1959 and then held and lived off dividends or cashed out/interest in retirement, you did well.

Art Cooper adds:

The year 1954 is almost universally given as the "break-even" year to recoup losses for buy & hold investors who bought at the 1929 peak. It's wrong to do so. First, it ignores dividends. Had dividends been re-invested the recovery year would have been much earlier. Second, it ignores the deflation which occurred during the Great Depression. In this column Mark Hulbert argues that someone who invested a lump sum at the 1929 peak would have recovered in real economic terms by late 1936.

I'm not arguing against dollar-cost averaging, merely pointing out a historical falsehood.

Hernan Avella writes:

What people should do while they are young and have human capital left is to leverage!

Life-Cycle Investing and Leverage: Buying Stock on Margin Can Reduce Retirement Risk

The most robust research, incorporating lifecycle patterns and relevant time horizons for long term investors tells us that the optimal allocation is 50/50 all equities, domestic and international. But most ppl don’t have the gumption to be 100% on equities.

Mar

21

Deep Enough

March 21, 2024 | 1 Comment

Deep Enough: A Working Stiff in the Western Mine Camps is a book and biography of a great man, highly instructive - the expression refers to when a miner had sunk his drilling to a non-economical point and by extension mean "let it go" or "i dont care."

great book about riches to rags and riches again, telling all about the western mining business in early 1900's with many instructive parts about history, life, and business. highly recommend especially for those seeking true Horatio Alger stories.

[Frank Crampton was also co-inventor of a "trigonometric calculating instrument", shown on this page (scroll down) from the National Museum of American History at the Smithsonian.]

Peter Buol was a good man that grubstaked many a successful hard-rock miner - made a killing in Borax with Crampton.

Vic's twitter feed

Mar

19

Simpson’s paradox

March 19, 2024 | 1 Comment

Simpson's paradox is a phenomenon in probability and statistics in which a trend appears in several groups of data but disappears or reverses when the groups are combined. This result is often encountered in social-science and medical-science statistics, and is particularly problematic when frequency data are unduly given causal interpretations. The paradox can be resolved when confounding variables and causal relations are appropriately addressed in the statistical modeling (e.g., through cluster analysis). Simpson's paradox has been used to illustrate the kind of misleading results that the misuse of statistics can generate.

Lance Bialas comments:

Exactly the challenge we face at the macro level currently. Averages are giving us only the opaque as of now: real incomes, mortgage coupons, debt servicing.

William Huggins writes:

i teach people to use paired t-tests as a way of sidestepping the "inappropriate grouping" that causes Simpson's paradox. if you blend up groups rather than comparing like to like, its easy to make a mistake.

Zubin Al Genubi asks:

Would a larger sample size help avoid the paradox? Or higher confidence levels?

William Huggins answers:

t-tests (difference of means) aren't going to solve the problem because they compare average of group 1 to average of group 2. if those groups are composed to two subgroups with distinct traits (highs and lows, whatever) then the average of group 1 is really a weighted average of its two sub-groups. heuristically, we tend to assume that those groups all have the same size but its not necessarily true, which can create the "paradox" in which group 1 has a higher average than group 2, but group 1a < group 2a, and group 1b < group 2b.

the way to avoid it is to not group obviously different populations and then use the average to describe the distribution. but if that's already been done, the next question becomes whether or not there is some "pairing dimension" which explains some of the internal variation in both groups (a test for average difference between paired data points is powerful if your data meets the conditions). otherwise, consider a cluster analysis of some kidn to see if you can't break the larger group into its components (often statistically messy if you use multiple dimensions, easier when you use one or two and can do it by eye to some extent).

Jordan Low wonders:

Isn't the simplest explanation that one test is comparing student GPAs (simply reflecting grades), without accounting for the fact that smarter students take harder classes?

William Huggins agrees:

100%. when I write letters of rec for grad school (for undergrads who came out of sometimes large courses), among other things I include contextual data including rank in class, t-stat relative to class mean, and a raw count of how often they scored above the mean on assessments. when they've taken more than one course with me (have had some reach 4), I run the paired t-test and report their average spread over my own course means as well. recipients still have to benchmark "what a top student from that school" looks like in practice, but it's my (admittedly nerdy) way of helping others make sense of the letter grade on the related transcript.

Mar

17

Body Snatchers

March 17, 2024 | Leave a Comment

preparing us for something she saw:

Janet Yellen warns inflation decline might not be 'smooth'

lets now interfere with amazing growth and maybe in old mare's chances. you would think that Yale and husband taught her something about indirection - but I guess the blinders on her - she never said a thing that wasn't in the old mare's interest.

i find Invasion of the Body Snatchers relevant to the choices made in work and politics today.

Vic's twitter feed

Mar

14

an interesting study of change in the last 100 years and the replacement of the old which the author loved and the new which he hates.

Small-Town America: Finding Community, Shaping the Future, by Robert Wuthnow.

but compare beautiful and loving depiction of small town life.

Old Home Town, by Rose Wilder Lane.

Vic's twitter feed

Mar

13

I found this podcast episode very interesting.

Contextualization Within a Framework of Conditional Probabilities w/ Will Gogolak

As a risk officer with the Chicago Mercantile Exchange, Will Gogolak was setting margin requirements and saw a wide variety of traders’ accounts and what separated the winning traders from the losing ones, before leaving to pursue his own trading and obtaining a PHD in finance and share his knowledge of quantitative analysis and market experience with students at Carnegie Mellon University. Combining his market experience with knowledge of statistics helps William create his custom buy the dip strategy with futures and leveraged ETFs, and focusing on probabilities and determining market direction for informed trading decisions.

Peter Ringel agrees:

Love the hole series. Half of speclist was a guest.

Big Al offers:

Also very informative are these interviews with "Uncle Roy", on Top Traders Unplugged:

From 2014:
Part 1
Part 2

From 2023

Zubin Al Genubi comments:

Speaking of cognitive bias, I realize that if I feel bearish, so does everyone else. You have to go against how you feel and against the consensus.

Sam Johnson asks:

Do you need to go against the cognitive bias of how everyone FEELS or how everyone is positioning?

Zubin Al Genubi responds:

Don't most traders and their systems trade and position for that past regime? As Roy said, trend followers are all piled in at the turns and all will reverse at the same time. With the widespread use of systems everyone is doing basically the same trade. You can't get a fill after the turn as we saw last fall. You have to pre-position…be in position ahead of the enemy forces.

Mar

12

Sandhills Boy

March 12, 2024 | Leave a Comment

Sandhills Boy is a bio of Elmer Kelton and the cattle business in west Texas from 1920 to 1950 and the life of Elmer and his father. It shows that Elmer's life covered every variety of hardship and striving and experiences with minipulation in prices. The audible recording narrated by george Guidal is highy recommended for all.

Vic's twitter feed

Mar

11

More Dimock

March 11, 2024 | Leave a Comment

From Wall Street and the Wilds, by A. W. Dimock, pages 142 and 145:

My own surplus money burned holes in my pocket and seldom has the proverb, "Easy come, easy go," received more apposite illustration. From promoting a church to buying a castle, from street railroads in Boston to Sea Islands in Carolina, my check book was always busy. Incidentally it was lavish when my sympathy was appealed to and for all such gifts I have nothing but scorn to-day, now that I know what real sympathy may mean and from behind the scenes have witnessed the hollow mockery of advertised philanthropy.

Thrice have I purchased or built costly edifices as residences for my family and myself and three times has fate stepped in and taken them for schools, wherefore I have come to look upon myself as an instrument of Providence designed for the promotion of education.

Vic's twitter feed

Mar

10

1999-2001 is an interesting period to study as there are many parallels to the present. Back then, the approach of the year 2000 caused a rush to buy new technology to fix all the old systems that used two digits to represent the year. The efforts were generally successful, and doomsday predictions failed to materialize, but the event pulled a lot of demand for technology from the future into the present. When that future arrived in 2001 and 2002, technology sales slumped because everybody already had shiny new systems–no need to buy more. A similar scenario occurred with the rush to enable remote work and communications in 2020, a bonanza for technology companies. What is different this time is that the technology bust resulting from the saturated market already occurred in 2022-23, but now there is a second wave.

K. K. Law notes:

Don't know if anybody ever mentioned about in the 2000 era many optical components manufacturers double-booked and triple-booked the actual TAM. I knew that first hand but too late. Then the CEO of a major component manufacturer called JDSU, now has become a much bigger company, due to multiple M&As, decided to resign in order to sell his company stocks.

Steve Ellison responds:

I vividly remember that JDSU reported blockbuster earnings in October 2000 that for a day or so reversed the Nasdaq rout that by then had been in progress for 7 months. Jim Cramer, who was still running his hedge fund and presumably still had an edge from calling his buddies at bulge bracket firms to find out what big orders they were working that day, pointed out that JDSU's sales were probably just piling up in inventory at downstream suppliers (that had all reported disappointing results); hence JDSU sales were about to go off a cliff. Since I still have the scars from owning JDSU, I developed a tracker of some important companies in Nvidia's ecosystem (chart below). If one of the other stocks turns down, maybe it will be an early warning.

K. K. Law comments:

The actual bookings of all the optical suppliers were over-inflated by many folds over the actual demands by the telecom system manufacturers and service providers . The market eventually realized that.

Steve Ellison adds:

Even in the absence of fraud, when there is a component shortage, buyers inflate their orders to try to gain priority, and executives at the supplier might misinterpret the orders as real demand. When the bottleneck is alleviated, and supply begins to actually flow, the buyers quickly cancel the excess orders in a phenomenon known as the "dreaded diamond", as I discussed in a Spec List thread in 2021.

Mar

7

Price Signals, Price Gouging, and Philanthropy, by Peter Calcagno

In the wake of the (COVID-19) pandemic news outlets and politicians alike are discouraging everyone from price-gouging and hoarding. The question is why? We are told that to raise the prices during a crisis such as a natural disaster or a pandemic is cruel and unethical. However, as any good principles of economics student can tell you, price gouging laws only create price ceilings and shortages of goods. No one is directly calling for the capping of prices on goods during these times of crisis, but price gouging laws are effectively the same. Producers are afraid of raising prices for fear they may be reported as price gouging, and in many states, the burden of proof is on the producer to demonstrate they did not engage in price gouging.

The issue at hand is an old one in economics that people keep failing to learn. Prices are signals that contain information and incentives and help to ration goods. F.A. Hayek demonstrated that we do not have to know why prices are rising to understand how to behave. As consumers, we economize on goods, and producers understand that there is a greater demand for the product and should offer more to the market. What price gouging laws cannot do is change the scarcity of resources as Michael Munger explained to us years ago after Hurricane Fran. Instead, we have to find new ways to allocate scarce resources like waiting in line for first come, first served, or worse discriminatory practices. Yes, this sometimes forces us to make hard choices as to whether we should forgo the beer for toilet paper (or maybe it’s the other way around).

Vic's twitter feed

Mar

6

Wall Street and the Wilds, by A. W. Dimock, from pages 79-89:

Having proclaimed that all speculative systems are fallacious and having denounced their advocates as false or foolish, I am about to exploit one myself, claiming for it a mathematical and logical basis and substantial infallibility in practice. At least it proved unfailing during the years I employed it, and the average daily profits ran into the thousands. That my share of the accumulations failed to remain with me was not the fault of the system, but my own. Through its proceeds great railroads were founded, educational institutions endowed, and family fortunes established. My partner, who looked on askance at first, soon adopted the theory that a method which, though dealing in chance, worked so independently of it, was business and not gambling.

But while the pendulum of the gold tide beat slowly, the rise and fall of the waves was like the swinging balance of a watch. The unit of transactions on the Gold Exchange was five thousand dollars in gold and the prices varied by one eighth of one per cent. On an active day in the market, even though gold might close at the price at which it opened, the fluctuations, counting by eighths, ran high in the hundreds and sometimes invaded the thousands. What was the use of customers with their occasional commissions by the day or the week, when commissions galore hung before my eyes in every change in the market, whether up or down? I made of myself a nerveless machine and for nearly all the three hundred minutes of each daily session stood beside the curved rail that enclosed the Gold Room pit buying five thousand gold at every eighth.

All day I stood there, buying and selling, buying and selling, with a stubby pencil in my right hand and in my left a note-book, on the one and other side of which I dashed down prices with hieroglyphs for names as I nodded to the right and the left my acceptance of bids and offers. One minute might pass without a transaction and in the next a score be crowded. Always my bid and offer were on the floor a quarter per cent apart. Thus if I had just bought five thousand at a premium of fifty and one-eighth per cent, I would bid fifty for five more, and offer to sell five at fifty and one quarter. Every purchase was balanced, sooner or later, by a sale of the same amount at an advance of an eighth per cent. Thus if I made one purchase and sale in each minute of a day's session my profit for that day would be $1,875. Often this profit was multiplied, for in times of much excitement the price would skip the fractions and jump one per cent at a leap, in which case instead of selling five thousand at each eighth advance, making forty thousand at an advance of nine-sixteenths, the whole forty thousand would be sold at an advance of one per cent, an extra profit of $175.

Always the market looked strongest just as it was nearest its culmination and already tottering to its fall. But though reason and experience told me this the burden I carried rested no less heavily on nerves that were sore and quivered at every comment, in the daily press or on the floor of the Exchange, on the phenomenal strength of the market. That which bore me up and carried me through was the constant throbbing of the machine I had created. Buying and selling, always buying and selling at each eighth decline and each eighth advance, helped me to forget the adverse flood that the whole world seemed to predict.

Vic's twitter feed

Mar

2

While S&P 500’s Friday [23 Feb] gain was only 0.03%, it was enough to propel it to another all-time high (13th record close this year); in years when S&P 500 did hit an all-time high, it did so 29 times on average since inception of modern version of index in 1957.
-Liz Ann Sonders

Here's #14 this year as we close up [1 Mar].

Peter Ringel asks:

How & why should one exit any equity longs [given the market advance of the last 10 years]? Not a trivial question to me.

Zubin Al Genubi responds:

Trade your system expectation time. Develop systems that can capture a trend. (Good luck with that.) (Or at least allow re entries, break outs.) Use appropriate money management and the geometric returns over time and increase net wealth. Trading in a nutshell.

Peter Ringel continues:

what if buy & hold is the best system in your arsenal - not annualized systems, but realized systems and normalized for risk? (though normalized for risk & leverage might be a debate.)

Let's say I have an uber-bullish setup: enter on 5th trading day of year and hold 5 days (not a real one). I can annualize it to compare it to other systems, but really it is just one trade, just a little slice of the year. In this case and current drift - an exit on day 5 is not justified, holding forever is.

Zubin Al Genubi sums it up:

Hard to beat buy and hold, but the drawdowns are hard to handle. Define your risk tolerance and design system around money management. As long as the system is positive it doesn't really matter how good because all returns were in the past. If you mean by "annualize" compounded annual geometric returns, that is the right way to compare systems, but also include the money management in the comparison. That is critical part many leave out.

Jeffrey Hirsch writes:

Today’s post RE ATH:

Ex-2020 S&P 500 Flatter Election Year March
But after 4 months of solid gains the market is poised for a modest pullback of maybe 3-6%.
S&P 500 Support: 4800 old ATH.

Steve Ellison comments:

A decade or so ago, I studied the 4-year presidential cycle and concluded that the pattern in annual returns had been very pronounced from 1948 to 1980. After 1980, maybe as a result of the pattern becoming widely known, later results were much more mixed and fell below statistical significance.

That said, for the past two years beginning with bearish midterm election year 2022, the major market averages have closely followed the classic presidential cycle playbook. I assume that, like the uptrend in NVDA, it will continue to work until it doesn't.

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