Welcome to Lighthouse Outlook, the podcast where we talk less about the markets and more about what matters to the people navigating them. From family offices to founders, we go beyond the numbers to unpack risk, legacy, and the human side of capital. Hosted by the team at McNichol and Associates Asset Management.
Well, welcome everyone. This is our podcast and we've got the pleasure of having Jeff Hirsch on the podcast from Stock Traders Almanac and yeah, welcome Jeff. Really look forward to the discussion and hearing more about your thoughts on what your forecast and outlook looks like.
I appreciate you having me on, Dave. Looking forward to chatting.
Before we start, I hear you recently had an injury.
Well, I had a hip replacement because it was a little bone on bone and then everything's going great, but my foot seems to, the other foot seems to have a little reaction to compensating. So we're just taking it easy on that one. We'll be back on the golf course when the snow thaws.
Okay. I hope so. Yeah. I had a client with the same story this morning. Her hip problem and they had to go back in and redo it. So,
No, the hip's great. The hip is great. They killed it. I mean, it's better than the old one, for sure. But just walking on the other foot, you know, created a little bit of overuse on the opposite side. So,
Well, let's hope Mother Nature heals you nicely and time wounds. So I think I'll just start with a little introduction on myself just for those who are joining today or see it in the future and then maybe get you to do the same. So my name's Dave McNichol. I'm in my 40th year in this industry and I still feel like I'm new to it. But I got my engineering degree at University of Western Ontario just outside of Toronto and I've decided I'd turn that engineering academia into sort of financial engineering. And yeah, we'll probably get into some things later if they come up. But today's meant to be more sort of informational and educational for anybody listening in. I've always worked on the buy side. I got my roots at a trust company in Toronto and got six years of really basic training there. And after that, I worked at a variety of partnerships and decided to go out on my own. It'll be 25 years this September that we've had this independent company doing lots of interesting things. Family of three adult children, boy, girl, boy, and we've been blessed with two granddaughters. So, life is good. Jeff, maybe tell us a bit about yourself.
Sure. Well, like yourself, my father, Yale Hirsch, the man who started the Stock Trader's Almanac, went out on his own back in the '60s, just before I was born in 1966, after working under the tutelage of our cousin Sam Coslo at Indicator Digest out of Palisades Park, New Jersey. He went out on his own and decided to take all the market's cycles, patterns, indicators and put them all together in a calendar format so that he could follow the market schedule along with his own and he created the Stock Trader's Almanac which has been a big hit over the years. It is going into its 60th annual edition for 2027. I will be 60. So I'm as old as the book. I was born, bred, weaned, raised on cycles, patterns, seasonality, looking at charts as a kid. But I had fought it for a while looking to try to make my own mark, you know, as people do. And one of my friends, my good friend just said to me, 'Jeff, what are you doing? Go work for your father.' And you know, this was in '89. And I had run numbers, done calculations for him. We used to do the Almanac math by hand with an adding machine and a ruler and a pen and craft paper and all that stuff. I worked sending books out to brokers and advisers like yourself as a kid for years. But in '89, I joined forces with my father and you know, we battled as fathers and sons do. But there was one moment we were sitting in the conference room. You know, we do a bunch of newsletters also right now as yours and thank you for being a subscriber and a longtime user of the Almanac. But we were debating some seasonal pattern. My father was making a case to some of the other writers and analysts in the room and nobody got what he was talking about. It clicked in my head and I was like, you know, I get what you're thinking, Dad. And from then on I just sort of understood the mindset and we stand on his shoulders. You know, he created things like the Santa Claus Rally, the January Barometer, not Sell in May and Go Away, but the Best Six Months switching strategy, which, you know, I like to say you got to buy in October and get your portfolio sober and forget about selling in May and go away. But, you know, we do reposition there. I myself have two adult sons. One's going to be 21, one's 18. They're both at university. No grandkids yet. Just a cat left. The wife and I are working on our new life as sort of empty nesters, but we're still going up and seeing the boys. They both play rugby, which I played. So, you know, we go visit them and we're looking forward to having them over.
Oh, that's great. That's great. So, life is good.
And I forgot to say two important things in my life are my two dogs. So, a very proud dog owner.
Here I just want to put the book up on the screen. Hopefully it shows up in front of... Probably not because I've got my little background thing on. Oh, yours shows much better. So, this is a wonderful edition. As you say, your 59th. And, I don't know if you roll over these quotes every year or not, but there's some really strong ones here. Like William J. O'Neal, he was a mentor of mine for years with Investor's Business Daily and I think he left us in '19 or 2023, but I just want to read his quote here: 'Historical price patterns continue to work because human nature doesn't change and neither does the law of supply and demand. Study past successful stocks if you want to know what future ones will look like. Stock Trader's Almanac is all about historical facts.' And I thought that was your strongest quote out of all these other famous people and people that I know throughout our careers. But then, you know, I don't know how many of your people actually read it cover to cover, we try to, but it's just laid out every month, you know, what's coming up in a really easy condensed table of contents. And oh, there's your father there. So he did it from, as you said, 1966 to 2000. That's probably when you stepped in, in around 2000. And
Yeah, just before I got married, we did a little succession plan.
Okay. Okay. Well, that's... I started mine in 2001, so we've got sort of the same longevity in a going concern. Yeah. So, if anybody who gets this, I think they should encourage themselves to go through the month by month or just one month at a time while you're living it.
People ask me that question all the time, Dave. You know, and I tell them, yes, start in the beginning, read the intro, learn about how we lay things out. But if you're buying the book right now in February, dial into February to the present and then go sort of backwards and forwards. I mean, it's made so you can read one page at any time, but definitely cover to cover. But if you're in a pinch, see where we're at right now. Go, you know, read a couple pages before and after the current date on the calendar.
Well, that's why I just wanted... I'm not going to read through the whole introduction to everybody. They can do it on their own. But there's a great segment where you jump to page 54. I got it page marked. And this is, as you alluded to earlier, the Sell in May, Go Away, Don't Come Back till Labor Day. On page 54, it's this, the Best Six Months. And it's just incredible the difference. The November to April gives you over a 7% return for the Dow and the May to October gives you less than 1%. So, it's just so different. I see what you're saying. The Sell in May hasn't worked all the time. Like 2024, you would have been a mistake to do that. Who knows with all the money pumping into the system right now if 2026 will be a strong one. I'll give my comments on that later, but what are you thinking for this year?
Well, I mean, the past few days and few weeks, we've seen some increased volatility, but coming into the year and after the January Barometer is positive, we're looking for, you know, a more bullish midterm year because it's the second midterm year. We're looking for about 8 to 12% gain on the market. But, you know, the market is struggling, suffering from a little bit of growing pains and some consolidation. There's a bit of hair-trigger reactions going on to things. So, we're watching that. But for now, we're about 70% probability we're going to see the 8 to 10% gains. You can see the chart on page 11 sort of covers that. I've updated that in the newsletter service. But, you know, you were asking specifically about selling in May or repositioning in May as we like to do. What that, you know, how that looks for this year. Two things. You know, it's the midterm year weak spot is Q2 and Q3, which lines up with the worst six months. And we also put out a little study you might have seen on the streaks, nine-month winning streaks for the Dow, which is impressive and tends to lead to further gains over the next couple of months, which would be February, March, April. But then the gains start to, you know, mellow, start to wane and it kind of lines up with the weak spot or the worst six months. So, and you know, there's a whole study, a whole strategy in the book about overlaying the four-year cycle with the Best Six Months. So you buy at the midterm low and you hold all the way through to the post-election year, you know, April, May, and then you trade back and forth post-election, midterm year. So this would be a year that you would be trading that midterm year where six months tends to be a little more reliable on the, you know, not-so-great side than some of the other years. So, wouldn't be... I wouldn't be surprised if I see us tightening up some stops, selling some underperformers, and really limiting new long buying as we get through, as we start to get into Q2 of '26.
How did you fare in last year, in 2025?
We fared pretty well. The seasonal patterns got a little turned on their head after the tariff tumble or tantrum, whatever you want to call it, there in April, that low. So we got back in after getting washed out there. And you know, that's when you don't just rely on cycles and seasonals alone and you look to some of your other tools, fundamentals, technicals, and basically, you know, the tape itself, you know, you don't fight the tape. So once we cleared some of that resistance, we were back in. But the season, all the Best Six Months, Worst Six Months wasn't all that great last year because the worst six months were fantastic as we bounced off that April low. These things happen. But you know, you have to overlay some other analysis and not just be one-dimensional in how you approach the market.
Okay. Well, going back to the book, just curious, how many of these would you distribute in a, you know, hopefully going into the end of last year?
Well, when we were self-publishing back in the old days, we were doing 30 to 40,000 a year, on average. And I think our peak year was about 77,000 or so. Just before, I think it was the 2001 edition, which came out in 2000, you know, we sold a lot of them. I mean, over a million and a half books sold. I think now they're doing around 20 or so. But, you know, that's somewhat proprietary information.
I didn't want to get too corny there, but you've got John Wiley as your publisher. And, you know, if I went and tried to publish my first book, I think they would take a pass on me, but that's just me.
It helps to have a little bit of history and legacy. It is a benefit.
Now, how do you go through, like, there's recurring patterns, you carry those over year to year and the calendar changes by a day year to year type of thing, but how, like, are there any other, like, really challenging things moving it from last year to this year and so forth?
It was much more challenging before the advent of Microsoft Excel and Visual Basic and SQL Server and all these types of programs. A lot of it took a lot longer by hand back when I was, you know, growing up and coming into the business. So some of the shifts are there. I mean, I think making sure that things get, you know, there's a lot of numbers in there and making sure they're accurate from year to year when you go from, you know, sending the files to the graphic designer and things change when other people go to put them in. So I think the biggest challenge is making sure the data that we compile and give to the designer is correct, you know, gets copied and pasted incorrectly and not sometimes something gets picked up because you do a template from the next thing. I think that might be the biggest challenge. I mean, running the numbers and looking at the data and seeing how the patterns shift or change is one thing, but making sure that the product and the information is updated correctly by the different team members that have to get their hands on it is a challenge, you know. And then the switching of, you know, the intraday trading patterns, the daily trading patterns, the monthly cash flows. That gets a bit tricky with different trading days and how the calendar shifts. But, you know, we've done it for several decades. So you get kind of, you have kind of an eye for that.
And I would imagine nowadays a majority of your users are accessing you online and maybe just refer to the book from time to time. So there's a lot of great content on your website, by the way. So, uh, see that? So,
I think it's important to have something, you know, physical by your side to check on. I mean, what happens when the electricity goes out?
or there's some Verizon, you know, cell phone thing that went down or some website crash. I mean, these things happen.
Yeah. Well, we'll talk about Bitcoin later, but how it's going to exist with such scenarios. But let's go back to one thing you commented about, the sweet spot of the four-year cycle and you also referred to the weak spot talked about in the actual book. Where do you think we are in this cycle and it just keeps sort of pushing as to where you see things going in the future?
Well, right now we're, you know, well into Q1 of the midterm year. The weak spot is Q2 and Q3 of the midterm year. So we are approaching that where I suspect we'll see some consolidation of gains and some lower prices. I mean, on average in the midterm year, Dow and S&P are down about two, two and a half percent over the two-quarter combination, you know, from April through September, and NASDAQ averages down about 6.6%. So that's the weak spot, the, you know, Q2 and Q3 of the midterm year. That sets up what we call the sweet spot where you see this huge gain, excuse me, from the fourth quarter of the midterm year to the second quarter of the pre-election year. This time would be '26, you know, Q4 to '27 Q2. That averages about 20% down in S&P over the three quarters and close to 30%, 29.3 for NASDAQ. So that's, you know, we're basically approaching the weak spot. We're seeing some weakness here already. Maybe it comes a little bit earlier. I mean, these are averages over the year, so we may get a little weakness in the middle of the midterm year, either earlier or later depending upon events that transpire that trigger that. I mean, the election, the midterm election themselves, that battle, which is going to be pretty heated this year, is what creates that uncertainty, that historic uncertainty there. And we've got some other uncertainty factors going on with AI and Bitcoin, as you alluded to, amongst other things. Bitcoin has an interestingly horrible midterm election year history. Not that there's that many of them, but so I think it's going to... a little patience is going to be in order for the market. It's being tested already. As I'm sure you felt with your portfolios and your clients, people are getting a little bit antsy right now.
