Pre-Presidential Rally Starts Now

Curtis Teberg, market historian, former broker and portfolio manager of the tiny $35 million Teberg Fund in Duluth, Minn., is betting on a monster rally in the stock market during the 15-month midterm election cycle

Curtis Teberg, market historian, former broker and portfolio manager of the tiny $35 million Teberg Fund in Duluth, Minn., is betting on a monster rally in the stock market during the 15-month midterm election cycle that began in October and ends Dec. 31 of the pre-presidential election year. In fact, he expects the Dow to hit 16,000 by the end of 2007. Sounds crazy until you examine the numbers. Teberg studied the results going back to 1986 on the three major indices (DJIA, S&P 500, Nasdaq), and back to 1926 with the Massachusetts Investment Trust, one of the oldest mutual funds around. Over the past 80 years, that fund averaged a 23.25 percent return during these 15-month cycles, versus an 9.2 percent average annualized return for the fund since inception on July 15, 1924. For more from Teberg, see the “60 Seconds” column on the next page.

Pre-Pres 15 Month Cycles, or PPEYS

Returns on the major indices, with dividends reinvested, as measured from mid-term elections through 12/31 of the pre-presidential election year (PPEY):

  DJIA S&P 500 NASDAQ
Oct. 1, 1986 - Dec, 31, 1987 11.75% 11.12% -5.76%
Oct. 1, 1990 - Dec. 31, 1991 34.93 42.16 70.19
Oct. 1, 1994 - Dec. 31, 1995 37.64 37.56 37.66
Oct. 1, 1998 - Dec. 31, 1999 49.58 46.82 140.24
Oct. 1, 2002 - Dec. 31, 2003 41.87 39.54 70.93
15-Month Average 18.96 12.03 20.38
PPEY 15-Month Average 35.15 35.44 62.65
Source: Curtis Teberg, and Morningstar Principia
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