Since 1995's gain is likely to be large by most standards, 1996's gain is likely to be far less. Since Mr. Stoken's book was published in 1984, I performed the same calculations for 1986 and 1990. The last time this happened was in the period from 1942 through 1950. History says it is. While it's fun studying historical phenomenon such as The Presidential Cycle, one would be better served by staying with fundamentals.
Stock prices rise when inflation and interest rates go down and earnings go up.
This is exactly what happened in 1995, but the trends are likely to weaken. Inflation will not go down much further, and interest rates certainly will not rise during an election year. Earnings growth is is still on the rise, but the rate of earnings growth is slowing. This scenario says that the stock market will be OK in 1996, but we may have seen the best of The Presidential Cycle. VectorVest ProGraphics is comprised of reports embodying a unique system of stock analysis.