by Gary Alexander
May 6, 2025
We’re having a troublesome 2025 so far, but over most of the last 200 years, these post-election years – any president’s first year in office, first or second term – are the worst year of the four, rising barely 2% vs. 10% or more for the pre-election (3rd) year. In post-election years, as measured by the Dow Jones Industrial Average (since 1886) and minor indexes before that, the folks at Stock Trader’s Almanac have tabulated 24 down years and 23 up years for each elected president’s first year of a term since 1833. This compares with 36 rising years (75%) and 12 falling years during the third (pre-election) year of the cycle.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
In recent years, there were four straight down first years to launch Nixon’s two terms, beginning in 1969 (-15.2%) and 1973 (-16.6%), then an even worse opening year for Carter (-17.3%) and then -9.2% for Reagan, whose opening quarter closed on March 30th with a bullet coming within an inch of his heart.
Then, in August, Reagan pulled a Trump-like move against the 15,000-member Professional Air Traffic Controller’s Organization (PATCO), by calling their bluff to go on strike by firing them all. And then he got into Beltway wars with a Democratic Congress over cutting top tax rates from 70% down to 28%.
The initial result in Reagan’s first year of Making America Great Again was a 24% 16-month drop in the Dow Jones index – an official bear market – running from April 27, 1981, to August 12, 1982.
Despite campaigning on a now-familiar MAGA slogan (Wikipedia), the Dow fell from over 1,000 in Reagan’s first 100 days to under 800 a year later, but then it shot back to 1,000 in short order in August-October 1982 (Fiendbear).
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
And now, President Trump seems to be condensing the crises of Reagan’s first 18 months into his first six months, something like what happened to John F. Kennedy in his first 200 days – with a dozen new and noble programs hobbled by his Bay of Pigs blunder in April 1961 and a failed summit with Khrushchev in Vienna in June, resulting directly in the Berlin Wall in August, and then to the Cuban Missile Crisis.
Trump seems to be juggling dozens of crises at once – or is that just the instant circulation of Internet opinions and conspiracy theories? Either way, we got a big 21% bear market correction early, from February 19 to April 7, and now a hopeful recovery as Trump reverses some of his more extreme policies after telling us on Truth Social on April 9th that “NOW IS THE TIME TO BUY!!!” – a great market tip!
Looking at this year’s first four frenetic market months, stocks are still down, and gold is up 25%, but most commodities are down. The Invesco DB Commodity Index Tracking Fund (DBC) fell by 8.6% in April and -2.9% for the year, through last Friday. Through April 30th, according to Bespoke Investment Group, crude oil prices are down by 17.8% and natural gas is down 22.5%. According to Trading Economics, industrial metals are also negative: Iron ore is down 9.7% year-to-date and steel is off 7.8% with zinc down 13.2%. Silver, being both an industrial and precious metal, is up 12.4% through April 30.
Part of the reason why gold gained 25% in 2025 is due to the 10% decline in the U.S. Dollar Index (DXY) from its peak of 110 on January 13, to a reading of 99 since April 11. However, the falling dollar has not helped those other falling commodities (oil, zinc, steel and the rest), since global growth rates have slowed during the international tariff wars over the last few months. For April and year-to-date, Bespoke Investment Group compares these major investment assets, with gold the clear winner so far.
Lately, the S&P 500 has risen nine days in a row, up 10% since April 21st and +17% since April 7th, so there is hope that the worst is over. Now, let’s make like John Lennon and imagine a Peace Dividend:
What if the wars in Ukraine and/or the Middle East end this year? Could that make for a great first year?
The post 5-6-25: First-Year Flops Are Normal in Market History appeared first on Navellier.
