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Dow Jones Industrial Average History

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The Dow did not fall below the trip line, extending from bull signal #01. It came close, though. You should notice the short-term blue curve collapsing in early 1919 pre-election year. At bear signal #02 in early 1920, the Indicant account balance was at $38,369 versus buy and hold's balance of $14,353. The Mid-term Indicant enjoyed a 167.3% advantage over buy and hold at that time.

By bear signal #06, the Indicant account balance was at $32,840, which was down from where it was at bear signal #02. That is because the Indicant endured transactional losses at bear signals #04 and #06. Although being a bit disgruntled at that disappointing performance, the buy and hold account was at $10,848. So, after twenty-one years of stock market investing with buy and hold, only $848 was made. Considering inflation, a whole generation enjoyed no gains from the stock market from 1900 through early 1921.

 

Wilson's second term endured two bear years and two bull years. The normally bullish election year was horrendously bearish in 1920. The American public paid the price for allowing the egomaniacal Wilson to enjoy his final year in office as a lame duck president. Such people invoke increasing economic damage on their way out of office. 

DJIA Index was congruent with presidential election cycle historical standards with market falling in the post election year of 1917 as Wilson's continued damage was well underway and for four more years at that. The market's drop in 1917 may have been an attempt to predict the short recession that began in mid 1918, but not likely. One can argue that Wilson was simply bad for economic robustness. This is the first noted asynchronous behavior between the stock market and economic activity in the last century.

Notice the market's drop in 1917 was much more severe than the short recession that occurred in 1918. Notice how the market was increasing about six months before the recession. In that case, the stock market did not do a good job of forecasting the recession, but there was a bearish spurt from late 1918 through early 1919, where the short-term blue curve collapsed. There was no bear signal since Force Vector was rising and the Dow was setting on the bearish yellow curve.

The pre-election of 1919 was, characteristically, bullish, while the election year of 1920 was uncharacteristically bearish, but characteristically bearish for a socialist lame-duck as president.

The market's reaction to prohibition helped promulgate bearish directions that lasted for nearly two years. This tyranny by the majority democracy and over-zealous political leadership that tends to tell you how to behave was the beginning of socialistic causes that eventually led to the great depression. This political meddling created the mafia economy, where laws and regulations open the money spigot to underworld distributors who always cater to the demands of the people.

Woodrow Wilson was one of the worse presidents of all time.

 

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