An old saying is that as January goes, so goes the year. And
according to the Stock Trader’s Almanac, since 1950 the January
indicator has only five major errors for a 91.2% accuracy ratio.
“Vietnam affected 1966 and 1968; 1982 saw the start of a major
bull market in August; 9/11 affected performance in 2001; and
the anticipation of military action in Iraq held down the market in
January 2003.”
If you include the ten flat years, which the Almanac defines as
less than +/- 5% for the S&P for the entire year (not including
dividends), the barometer’s accuracy ratio is 75%; the more
common measurement.
So I thought we’d just look at the past eight years, specifically,
including two of the major mistakes (’01, ’03); while throwing in
gold and oil just for the heck of it.
…………S&P 500…Return for the year*………Gold…..Oil
12/31/99…1469………………………………..$289…$25.20
1/31/00…..1394…-5.1%…….-9.1
12/31/00…1320…………………………………272….26.80
1/31/01…..1366…+3.5%……-11.9
12/31/01…1148…………………………………279….19.84
1/31/02…..1130…-1.6……..-22.1
12/31/02….879………………………………….347…..31.20
1/31/03……855….-2.7……..+28.7
12/31/03…1111…………………………………416…..32.52
1/31/04…..1131…+1.7…….+10.9
12/31/04…1211…………………………………438…..43.45
1/31/05…..1181…-2.5……..+4.9
12/31/05…1248…………………………………519…..61.04
1/31/06…..1280…+2.5……..+15.8
12/31/06…1418…………………………………638…..61.05
1/31/07…..1438…+1.4……..+5.5
12/31/07…1468…………………………………838…..95.98
*For the yearly return, I include dividends. Stock Trader’s
Almanac does not. But I’m still including 2007 as a ‘flat’ year,
based on their methodology; the S&P being up 3.5% before
dividends.
The January barometer is but another tool, albeit an important
one particularly when the geopolitical scene is sanguine.
However, we have a far from sanguine environment today, I
would argue.
Sources: “2007 Stock Trader’s Almanac,” Yale Hirsch & Jeffrey
A. Hirsch…and my own archives for the gold and oil data.
Wall Street History returns next week.
Brian Trumbore
