Wednesday, December 07, 2005

Battling the Decennial Pattern

There are only 16 trading days left in 2005.

As has been stated over and over again - particularly before the year began - 2005 is "fated" to be a positive year for the Dow because of the Decennial Pattern (e.g. years ending with 5 have, ever since the creation of the Dow in the late 19th century, had a positive return - - indeed, a VERY positive return).

Years ending with 7 and 0, by contrast, have done relatively poorly.

As a bear, I am wanting to snap this pattern. I want it to end this year, because (a) we'll never hear about it again! (b) it'll be a major psychological blow to the bulls, with whom we are engaged in this financial war.

Well where do things stand now? Let's take a retrospective with the most recent instances of the magical "5" years....

1975 - 38.3% return
1985 - 27.7% return
1995 - 33.5% return

Wow! Those are really impressive numbers. So how's it going, 2005?

2005 (to date) - 0.2% return.

Whoo-hoooo! A whole FIFTH of ONE percent! Wow! Considering risk-free CDs are paying twenty times that much, that's pretty weak, wouldn't you say?

But it's still a positive number! Yet again, the year's not over until the fat lady rings the closing bell at the NYSE.

Stay tuned. The magic number of Dow 10,783. Above that, the bulls have bagged another one. Below it - - - you won't be able to shut me up.

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