Political leader market returns

The following table shows the stock market returns for political leaders since they came into office. The table is ranked by the final column – the compound annual growth rate of the market returns.

For example, Shinzo Abe has been prime minister of Japan for 62 months, over that time the Nikkei 225 Index has risen 111.2%, which is a CAGR of 15.7%.

 

Political Leader Country In Office (months) Stock Market Return (%) Stock Market CAGR (%)
Michel Temer Brazil 18 41.4 27.2
Donald Trump US 13 18.7 17.7
Shinzo Abe Japan 62 111.2 15.7
Narendra Modi India 45 38.4 9.2
Angela Merkel Germany 149 139.5 7.4
Xi Jinping China 64 41.0 6.8
Lee Nak-yeon South Korea 8 4.5 6.6
Malcolm Turnbull Australia 29 16.2 6.5
Theresa May UK 19 7.1 4.4
Mariano Rajoy Spain 75 17.1 2.6
Vladimir Putin Russia 70 -16.4 -3.1
Emmanuel Macron France 9 -4.5 -6.1

 

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Bitcoin trend value

As of 17 January 2018 the long-term* trend value of Bitcoin is $4605.

So Bitcoin would have to fall approx 49% from its current level to revert to its trend value.

Bitcoin daily price [2012-2018] (17 Jan 2018)

*”long-term” in this case meaning from 2012.

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Nikkei 225 performance in January

The following chart plots the month returns of the Nikkei 225 Index in January for the period 1980-2017.

Nikkei 225 performance in January [1980-2017]

In the 40 years from 1950 to 1989, the Nikkei 225 Index only fell in January in 6 years. After that, as can be seen in the above chart, the record became quite a bit more patchy. For example, in the 10 years since 2008, the Index has fallen over 8% in January four times.

Further analysis of the Nikkei 225 Index in January over different time periods can be seen in the following table.

Nikkei 225 in January [1980-2017]

In the 68 years from 1950 to 2017 the Index had an average month return in January of 2.5%, and saw positive returns in 69% of years. But since year 2000 this has dramatically changed (as was also the case of the US and UK markets). Since 2000, the Index has had an average return in January of -1.6%, the worst average return of any month in this period.

The following charts plots the cumulative returns for the 12 respective months since 1980 (for more explanation of this chart see here).

Nikkei 225 Index cumulative returns by month [1980-2017]

The cumulative portfolio for January has been highlighted in the above chart.

The cumulative performance of January peaked in 2001, at which point it was the best performing month in the year. Since 2001, the cumulative performance has dramatically under-performed that of other months.

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S&P 500 performance in January

The following chart plots the month returns of the S&P 500 Index for January for the period 1980-2017.

S&P 500 performance in January [1980-2017]

The characteristic of the market in January seems to have changed around the year 2000.

In the 20 years from 1980 to 1999 the S&P 500 index only fell in 5 years. But in the 18 years since 2000 the index has fallen in 10 years.

Further analysis of the S&P 500 Index in January over different periods can be seen in the following table.

S&P 500 in January [1980-2017]

In the 68 years from 1950 to 2017 the Index had an average month return in January of 0.9%, and saw positive returns in 59% of years. But since year 2000 this has dramatically changed, with an average month return of -1.1% and positive returns seen in only 44% of years.

Since 2000, January has the weakest record of performance for the S$P 500 Index.

The following chart plots the cumulative returns from 1980 for 12 portfolios, where each portfolio invests each year exclusively in just one of the 12 respective months. (and is in cash for the other 12 months of the year).

The best performing month over this period has been April, investing in just the month of April each year would have grown an investment of $100 in 1980 to $179 in 2017.

The worst month has been September (the bottom line in the following chart): a $100 investing just in the month of September would be worth $76 by 2017.

 

S&P 500 Index cumulative returns by month [1980-2017]

The cumulative portfolio for January has been highlighted in the above chart.

It can see that by year 2000, January was the strongest of all the months in the year, but that record changed after 2000. By 2017 the $100 would have grown to 130.

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Santa Rally 2017

The Santa Rally describes the tendency of the market to rise in the last two weeks of the year.

In 2017 the FTSE 100 Index had a return of +2.6% in the last two weeks of the year. So the Santa Rally effect held in 2017.

As can be seen in the following chart, the Santa Rally has only failed to deliver in two years since 2000.

Santa Rally [2000-2017]

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The Stock Market in January

January used to be one of the strongest months for shares in the whole year. From 1984 to 1999 the average FTSE All-Share return in the month was 3.3%, and as can be seen in the accompanying chart in those 16 years the market only fell twice in January. But after year 2000 things changed dramatically.

Since 2000 the average market return in January has been -1.6% with the market seeing positive returns in only six years, and in four years since 2000 the market has fallen more than 5% in the month. This makes January the worst of all months for shares since 2000.

Monthly returns of FTSE All Share Index - January (1984-2017)

January Effect

In the stock market this month is famous for the imaginatively-titled January Effect. This describes the tendency of small cap stocks to out-perform large caps in the month. This anomaly was first observed in the US, but it applies to the UK market as well. For example, since 1999 the FTSE Fledgling index out-performed the FTSE 100 Index in January every year until 2015. The small cap index under-performed large caps again in January 2016, suggesting that the anomaly was no more. But the historical trend re-asserted itself in 2017, with small caps out-performing large caps by 3.9 percentage points in January last year.

Outlook for 2018

Since 1800 the market has generally been relatively strong in the eighth year of the decade. It has been especially strong since 1958, with an average annual return of 11.0% and up every eight year of the decade until…yep, 2008. In that year the market fell 33% ­which has rather dented the performance of the decennial eighth years. Remove 2008 from the calculation, and the average annual return in eighth years since 1958 has been a stonking 19.3%.

The guidance from the centennial cycle is also encouraging; in 1718, 1818 and 1918 the respective annual returns for the UK market were +0.6%, +5.5%, and +11.0% ­ a steady progression of increasing returns suggesting a return of around 16% in 2018!

In the Chinese calendar it will be the year of the dog, which is excellent news. Since 1950, dog years (despite the name) have the best record of returns of the 12 zodiac signs. Since 1950, the average annual return for the S&P 500 Index has been 16.8% in dog years.

And, finally, the US presidential cycle has a significant effect on equity markets worldwide, including in the UK. 2018 will be the second year in the cycle and on average the UK market has seen returns of 2.0% in the second year of this cycle.


Article first appeared in Money Observer

Further articles on the market in January.

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International markets 2017

The following charts plot the performance of a selection of world markets in  2017.

Domestic currency

International markets 2017 Full Year Return

The following table gives a summary of performance for the fourth quarter, second half and full year in 2017.

International markets 2017 Summary 2

GBP

The following chart plots the GBP-adjusted returns (i.e. these are the returns for a GB pound investor) for the full year 2017.

International markets 2017 Full Year Return [GBP]

USD

The following chart plots the USD-adjusted returns (i.e. these are returns for a US dollar investor) for the full year 2017.

International markets 2017 Full Year Return [USD]

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Trumponomics

The Market Likes Trump

 

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UK FTSE 350 sector indices returns 2017: Y, 2H, 4Q

The following charts plot the performance of UK sector indices in 2017 for the whole year, second half and fourth quarter.

2017 FY

Sector index returns for January – December 2017

UK sector indices - 2017 returns

The data for the chart is given in the following table.

Index Rtn(%)
Industrial Metals 71.3
Electronic & Electrical Equipment 34.0
Beverages 30.0
Mining 26.5
Software & Computer Services 26.4
Personal Goods 23.6
Industrial Engineering 21.8
Financial Services 19.1
Real Estate Investment & Services 18.5
Nonlife Insurance 17.1
Travel & Leisure 16.6
Household Goods & Home Construction 16.2
Forestry & Paper 15.9
General Industrials 15.5
Chemicals 15.0
Mobile Telecommunications 14.5
Equity Investment Instruments 14.1
Support Services 13.9
Life Insurance 13.3
Banks 11.6
Industrial Transportation 9.2
Real Estate Investment Trusts 8.7
Oil & Gas Producers 6.2
Food & Drug Retailers 5.8
Aerospace & Defense 5.3
Food Producers 3.4
Health Care Equipment & Services 3.4
Tobacco 3.2
General Retailers -1.8
Media -3.7
Automobiles & Parts -4.0
Construction & Materials -4.2
Pharmaceuticals & Biotechnology -4.7
Gas, Water & Multiutilities -14.5
Electricity -16.2
Oil Equipment, Services & Distribution -21.1
Fixed Line Telecommunications -24.9

2017 2H

Sector index returns for July – December 2017

UK sector indices - 2017 2H returns

2017 4Q

Sector index returns for October – December 2017

UK sector indices - 2017 4Q returns

 

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UK equity indices returns 2017: Y, 2H, 4Q

The following charts plot the performance of UK equity indices in 2017 for the whole year, second half and fourth quarter.

2017 FY

Index returns for January – December 2017

UK equity indices 2017

The data for the chart is given in the following table.

Index Rtn(%)
FTSE AIM 100 32.9
FTSE AIM All-Share 24.3
FTSE Fledgling 23.0
FTSE 250 14.7
FTSE SmallCap 14.6
FTSE All-Share – Total Return 13.2
FTSE 100 Index – Total Return 12.0
FTSE All-Share 9.1
FTSE 350 8.8
FTSE4Good UK 8.2
FTSE TechMARK Focus Index 7.8
FTSE 100 7.6
FTSE4Good UK 50 6.7
FTSE TechMARK All Share 5.3
FTSE UK Dividend Plus 1.6

2017 2H

Index returns for July – December 2017

UK equity indices 2017 2H

The data for the chart is given in the following table.

Index Rtn(%)
FTSE AIM 100 11.6
FTSE Fledgling 9.5
FTSE AIM All-Share 8.7
FTSE All-Share – Total Return 7.3
FTSE 250 7.2
FTSE 100 Index – Total Return 6.9
FTSE All-Share 5.6
FTSE SmallCap 5.6
FTSE 350 5.5
FTSE4Good UK 5.4
FTSE 100 5.1
FTSE4Good UK 50 4.5
FTSE TechMARK Focus Index 3.9
FTSE TechMARK All Share 1.2
FTSE UK Dividend Plus -0.3

2017 4Q

Index returns for October – December 2017

UK equity index returns 2017 4Q

The data for the chart is given in the following table.

Index TIDM Rtn(%)
FTSE AIM 100 5.8
FTSE All-Share – Total Return 5.1
FTSE 100 Index – Total Return 5.0
FTSE Fledgling 4.6
FTSE AIM All-Share 4.5
FTSE All-Share 4.3
FTSE 250 4.3
FTSE 350 4.3
FTSE 100 4.3
FTSE4Good UK 4.1
FTSE4Good UK 50 3.8
FTSE SmallCap 3.2
FTSE UK Dividend Plus 2.6
FTSE TechMARK Focus Index 2.2
FTSE TechMARK All Share 1.8

 

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