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Wealth & Wisdom:
Kids Say the Darndest Things
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any of us may remember Art Linkletter’s TV show, House Party, which ran from 1952 to 1970. At the end of each show he would interview several children and their answers were often unpredictable and hilarious. Since this issue of Austin Faith and Family is focusing on children, I want to share with you a couple of Mr. Linkletter’s dialogues with kids I got off UTube, before we get to our financial topic. Hopefully it will put a smile on your face, and help you to listen better to your own children. Interview 1 (A.L. to 6 yr. old boy): “What do you want to be when you grow up?” (Child): “A bus driver or a pilot.” (A.L.): “Suppose you were a pilot and suddenly all four engines quit working. What would you say?” (Child): (long pause) “Our Father, which art in Heaven……..” Interview 2 (A.L. to 5 yr. old boy): “Who’s the boss in your family, your mother or your father?” (Child): (silence, then) “Both of them.” (A.L.): “Hey, you’re a real diplomat, aren’t you?” (Child): “No Sir, I’m a Catholic Baptist.” The Heart of a Child, and a Lesson for Us All On my nephew’s third birthday, someone sent him a $1.00 bill. It was the first real money he had ever received. He was so excited he carried it with him everywhere. One day his father took him shopping and he found a toy he wanted, but it cost $3.00. With a little persuasion from his father, it was decided the boy would save up his money and come back and buy the toy later. Meanwhile, everywhere he went he had his dollar in his hand or pocket. On one particular Sunday as the family was driving home from church, the boy’s parents noticed he didn’t have his $1.00 bill with him, so they asked, “What happened?” He shared that in Sunday School that morning, a lady told them about children in some parts of the world that had nothing to eat and no place to sleep. “She said how just $1.00 could feed someone for a day, so I gave her my $1.00,” he said. Needless to say, his parents were so touched,
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they went out and bought him that toy immediately. When his grandma heard the story, she sent him $3.00 - and so did I. It was a life lesson from Malachi 3:10 for us all. Mid-Term Elections & Stocks You may have heard that stocks tend to rally in fall and winter. That has often been the case. In fact, the S&P 500 and the Dow have gained repeatedly after the elections occurring in the third year of a first-term presidency. These elections seem to elate Wall Street. While past performance is no indication of future success, consider this: Wall Street has witnessed rallies after every mid-term election since 1942.1 The LeuthoidGroup, a Minneapolis-based investment research firm, has determined that the S&P 500 has gained an average of 18.3% in the 200 days following such elections. Widening the window of time, Goldman Sachs finds that the S&P has averaged an 18.1% advance during the 12 months following each of the 15 mid-term elections since 1950. (The gain averages 11.0% when control of Congress changes hands.)1,2 Consider another intriguing statistic regarding mid-term election years: in the five instances since 1942 when an incumbent first-term president was a Democrat, the S&P has gained an average of 21.3% for the year.3 The Dow may get a tailwind from the “third year effect.” Since 1945, the third year of a presidential election cycle has tended to be very positive for the Dow. As MarketWatch Columnist Mark Hulbert noted recently, the DJIA has averaged +24.7% in such 12 month periods (usually measured in fiscal years, i.e., 4Q-1Q-2Q-3Q) since the end of World-War II. In fact, The Dow’s average returns in other fiscal years of a presidential term have been puny in comparison: +4.0% in year one, +1.9% in year two and +3.3% in year four.4
Will 2010 follow the historical pattern? Excellent question. After all, no one is clairvoyant. This year, stocks have not followed the longstanding trends. Stocks typically do badly in September, yet September 2010 actually turned the market around. When it comes to November and December, let’s hope history repeats. Barry A. Tripp Transamerica Financial Advisors, Inc. (512) 258-1860 btripp@tfamail.com www.wealth-and-wisdom.net Investment Advisor Representative with securities and investment advisory services offered through Transamerica Financial Advisors, Inc. Member FINRA/SIPC and a Registered Investment Advisor.
Citations: 1 – Kiplinger.com/columns/value/archive/how-elections-affectthe-stock-market.html {10/12/10} 2 – foxbusiness.com/markets/2010/10/05/gridlock-looming-wallstreet-stands-gain {10/05/10} 3 – cnbc.com/id/38538007/Midterm_Elections_Produce_Pain_ Then_Gain_For_Stocks {09/27/10} 4 – marketwatch.com/story/mid-term-elections-impact-onstocks-2010-10-04 {10/04/10} 5 – online.wsj.com/article/SB10001424052748704062804575510 482714106168.html {09/25/19}
Last month, Standard and Poor’s Chief Investment Strategist Sam Stovall told the Wall Street Journal that the DJIA has risen an average of 17.1% in calendar years following mid-term elections since 1945, with less than 10% of these years seeing selloffs.5
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