Hello and welcome to the Stansberry Investor Hour. I'm Dan Ferris, I'm the editor of Extreme Value and the Ferris Report, both published by Stansberry Research.
And I'm Corey McLaughlin, editor of the Stansberry Daily Digest. Today we talk with Jeffrey Hirsch, editor of the Stock Trader's Almanac. Jeffrey has quite a story to tell about the Stock Trader's Almanac and about all the market history he's researched since he was a kid working with his father. So let's do it. Let's talk with Jeffrey Hirsch.
Let's do it right now. All right, Jeffrey Hirsch, welcome to the show, sir. Thanks for being here.
Great to be with you. Thanks for the invite, guys.
Yeah, you do something that is really cool in creating this Stock Trader's Almanac. Have you always been, all your life, just a sort of date fiend like this? I mean, has this always been like the direction for you?
No, but I was kind of born into this. You know, my father started the Almanac back in the '60s, so it was kind of like osmosis or trial by something, you know, by birth or right association. So yeah, you know, I worked with him over the years in school, you know, middle school, high school, running numbers, not like, you know, not like a bookie, but, you know, we used to do the calculations for the Almanac with the Barron's pages and a little ruler and a red pen and a piece of graph paper and an adding machine. I used to ship out the books. I used to look at charts over Dad's shoulders, you know, but I was trying to, you know, make my own path. And then, you know, back in 1989, my friend said, 'Jeff, what are you doing? Go work for your father.' So I said, 'All right,' you know. But luckily there was a click there. I mean, the man, the legend, had a mind and an iconic way of thinking like nobody else. I mean, that's why the Almanac's been around for as long as it has. It's the same age as me. But when I got in there with him, you know, we had our moments, but there was some things that happened that I kind of saw I thought like him a little bit. And there was one day, one moment, I forget exactly what the seasonality or analysis was, but there was a group of us around a conference table, some of the other writers or analysts, and Yale was making a point and nobody else got it, and I got what he was saying. So that was kind of where it clicked. But yeah, I'm kind of a stickler for details and numbers. I'm a little obsessive about stuff, but, you know, kind of genetic, so yeah.
So that's interesting because I asked you that question, you said no, and then I feel like everything you said after that was yes.
I guess it was, because I kind of wanted to, you know, make your own mark like every person does. And then you end up — I get asked now, are my kids, my son's gonna follow and be the third generation? They might. You know, we have discussions. I'm not pushing it. One of them's, you know, going to be 20, the other one's 17, so we let them see the world a bit before they come back. But we talk about the market and history and things like that, so it's possible.
But it doesn't sound like they work with you as closely as you described working with your father. Is that accurate?
No, not as much, because I think it's more the world's different and there's so much more of it. It's just, I mean, what we used to do by hand is a click of the button or a little code. So, you know, my business partners programmed all the stuff that we used to do on graph paper, but I ended up converting it to Excel for DOS back in the early '90s and then Windows 3.1, and then it's beyond my math capabilities. My algebra is not as strong. But no, they're not as — I mean, they're there. They've been to, you know, events with me, they've stood in exhibit halls and schmoozed and talked about it, but not quite as involved.
No, it's really, really incredible that this thing is still around, a testament — yeah, a lot of people want it and they want it year after year after year for decades and decades. That's, you know, that's our dream in the business that we're in. You know, you want subscribers that just can't get enough of you for decades and decades. So, you know, good on you for being able to keep doing it. I mean, it must have changed — the Almanac must have changed some in some way over the years. You described how the process, of course, is now automated where it was manual in the beginning, but what about the content? Are you doing anything differently? What's different about it?
Well, I mean, there's less has changed than you'd think. I mean, it's amazing. You know, back in '69, my father had a page on October, you know, being this month where bear market bottom, it's, you know, the bear killer. That hasn't changed. There's a lot of stuff that hasn't changed. It's basically changed as much as human behavior has changed. You know, there's been some shifts. We have something called the indicator graveyard, you know, the September reverse barometer and a few other things go in there. Some of the best days of the month, the monthly five-day bulge. But the format, the layout, yeah, there's been some stylistic tweaks here and there, but there's still the weekly diary pages. I mean, the monthly almanacs, some of the things have shifted a little bit. We've got the mid-month spike that's, you know, kind of came in with the payroll deductions coming in every couple of weeks and going right into the IRAs and 401ks, and fund managers use it. But a lot's remained the same. You know, we still celebrate all the holidays that we all as a society celebrate. We still pay our bills monthly. We still start the week — I mean, crypto and some of the 24/7 trading, you know, is changing things a little bit. But I mean, if you look at the half-hourly trading patterns in the back of the book, one of the things I was saying that I used to do the calculations with for my father and for the book, that, you know, 2:30 Eastern Time, blow the rally, the close, the sort of intraday trading patterns have stayed the same. So we've updated things. I mean, post-election years have been a lot better since '85, but, you know, look at what's going on right now. I mean, President Trump is coming in and really shaking things up like we haven't seen before, at least in my lifetime, and it's starting to create that sort of old-school post-election year pattern where the first quarter is kind of weak, quite weak. We're looking at a potential correction. So a lot stays the same. You know, it's kind of like Zeppelin, you know, the market remains the same, human behavior remains the same.
I'm glad you said that. I'm a huge Zeppelin fan. So recently, just, you know, last couple of posts on X.com, I noticed one of them was on February 26: 'Beware the Ides of March. Rather turbulent in recent years with wild fluctuations and large gains and losses. March has been taking some mean end-of-quarter hits. Post-election years open strong then fade mid-month. Recent year trend lower.' And then it sounded like you sound a little more bullish a couple days later, March 1st: 'Trading day bullish, DJIA up 51 of 75 years.'
That's just history. That's not me sounding bullish. That's just pointing out that that trading day has that history. And, you know, it didn't really — you know, we had some news events that — I'll punt on Trump.
They sure did. Trump, the long-term historic pun intended.
Yeah, yep, yeah, there's a lot of trumping of long-term historical trends going on right now.
Yeah, yeah, I mean, things are getting shaken up, but, you know, you look at page 28 of the Stock Trader's Almanac and it talks about post-election years performance by party.
And back in the, you know, '50s, '60s and '70s, Republicans would come in and really change things quickly, and there's a history of, you know, weakness in post-election years under Republican administrations. And when parties are divided, like we had last year, the post-election tends to be weaker. You know, it's also kind of transformed into sort of a midterm election year, pre-election year, where they're trying to gear things up so that they don't lose as much in the House and Senate as they might normally in a midterm election year. So, you know, it's a new world right now with what's going on, but it's also kind of typical post-election year behavior where a new administration's coming in and making changes.
Right. And, you know, as you point out — well, you reminded me of a very popular observation that the market has tended over the decades to perform better during Democratic administrations than Republican ones, and maybe we're getting a bit of an explanation as to why that might be.
That's some of it. The actual real political alignment for good market performance is Republican congresses generally preside over the better market gains. The best combination has been a Democratic president, Republican Congress. There's a page on that in the '25 Almanac. But the margins are pretty thin right now. The Republican House is, you know, battling amongst themselves, it's pretty thin. And, you know, full unified government is not necessarily the greatest thing. All Republicans been better than all Democrats, but, you know, this is a different thing right here. We're seeing, you know, a real change in policy. I'm not convinced that President Trump is a follower of the four-year cycle, and he's really trying to take care of stuff fast so he can, you know, come back in, bottom things out or at least shake things out quickly. It's also, you know, he's on a short timeline with basically two years to get things done until the midterm election, so he's, you know, coming out like he said he was going to. And we're tracking it. You know, it's an inflection point. You know, honor your stops, stick to the plan, and don't try to second-guess this. I mean, let the market be your guide and be your barometer. But speaking of barometers, we had a positive January Barometer this year. That's one of the things that Yale invented in '72. That's a good sign. Doesn't mean we're not getting a correction, which we're kind of on the cusp of as we're chatting.
Yeah, interesting. I was actually going to ask you about the January effect, you know, whether or not it's real. I've got a whole book on the shelf that says it is, but lately I've heard otherwise.
Well, the January effect, first of all, is something different than the January Barometer. The January effect is the tendency of small-cap stocks to outperform large-cap stocks in January. That didn't happen this year. Small caps are having trouble with what's going on in the world and interest rates and clearly tariffs now. We've observed in the Almanac that that tendency for small caps to outperform large caps, the January effect, tends to take place in the latter part of the year, in the last two weeks of December. That also didn't happen this year. That's a concerning sign, you know, as well. But we see small caps start to turn around late October. The January Barometer, which is what Yale invented back in '72 along with the Santa Claus rally, is an indicator based upon the S&P 500 that as January goes for the S&P 500, so goes the year, kind of binary up or down kind of thing. There's been some errors, like nothing's perfect, nothing works 100% of the time. It's about a 75% accuracy ratio including all, you know, flat years, up or down, plus or minus 5%. Excluding the flat years, it's more like 80%. But then there's our January Trifecta, which we didn't hit this year, which is the Santa Claus rally, the LDT, which is the last five days of the year, the first two of the new year. You know his famous line: 'If Santa Claus should fail to call, bears may come to Broad and Wall.' Yale was a bit of a songwriter. And then you combine that with the first five days, which is an early warning system that's been around for a long time, and then the full month January Barometer. And when you hit all three, you get the year up about 90.6% of the time for a 17.7% gain. It's on page 20 of the Stock Trader's Almanac.
17.7, 90.6 up, 29 of 32 years when you hit all three of those. So kind of standing on Yale's shoulders, we combine those three into a Trifecta. So, and for our listeners, Yale — Yale Hirsch, yes, your father.
Yeah, Pop. Pop left us in '21 at the ripe old age of 98.
So, and I do want to ask you about — you say it's tracking a post-election year right now. What is the moving-ahead forecast? I think people would be interested in that. Of course, like we're coming off two straight years also of 20% gains in the S&P 500, of course, and, you know, that's like bubble territory. And so what's the forecast for the rest of this year?
My forecast, my base case scenario, which we give about a 65% probability to, was 8 to 12%, leaning on the more recent post-election year pattern with weakness in Q1, weakness in Q3, which we're seeing. You know, best case scenario was like 12 to 15%. That means everything's got to just click perfectly for the president and what's going on there. And then the worst case scenario — you know, I'll just — this is, we put this forecast out the Friday before Christmas. Worst case is old-school weak Republican president post-election year performance, just like I mentioned on page 28: Trump administration, Republican Congress implement too many drastic measures, inflation spikes, economy cools, rates higher for longer, and stubborn global turmoil, teetering on bear market, recession territory, flat to negative full-year performance with broad losses across most asset classes. That was a 10% probability that we put out on — was it December 20? What was the date of that? December 19th. I'm not convinced that we're going worst case right now. You know, we're still looking at that election gap on a technical basis that we're testing right now. Doesn't mean we can't dip a little bit through there. You know, the market really likes to hit stops and go through them if you put them out there. That's one of the things we don't do with our stock picks and ETFs. We don't put stops in the market for market makers to wipe you out of. We have — it's sort of an alert, you know, if the stock or ETF closes below the stop, then the next day we exit the position.
I see. But yeah, market's looking a little bit jittery right now.
It's interesting that you got so quickly — so quickly here, just minutes into this interview, we got to, you know, honor your stops and do your risk controls and do all that stuff that traders really are in the business of doing rather than making predictions, because it usually takes us a little longer to get there, but we always get there with every trader who knows anything what they're doing. I mean, we always get there. We've talked with Market Wizards, we've talked with Schwager, Jack Schwager himself, we've talked with dozens and dozens and dozens of people who trade for a living rather than like a long-term fundamental sort of value investor, which is what I am. And every time we talk to those traders, every single one of them winds up where you did, saying, 'But whatever you do, whatever else you may be doing, honor your stops.' And, you know, then you described how you put your stops out, you don't put them in the market, and so forth, which is another thing that everybody says. The other side of that is, you know, let your winners ride, right?
Yep, right, yeah, yeah, they all do it, they all have.
And then we get into, you know, how — what is the mechanism for this? You know, how do you set stops? How do you determine how long to let a winner ride? And it's funny to me — well, it's not funny, it's just very telling and very obvious that that's where the discussion ends up, because I think the average kind of investor who thinks — who's so, you know, sort of a novice and they want to trade more actively, they tend to think that it's all about the entry, you know, what you're buying and when. But really the discipline is not there. I mean, it is there to an extent. Everybody has their system for when they want to enter a trade, of course, and it's important, I'm not saying it's not. But when I press all the traders, when I press you all against the wall, say, 'Come on now, what business are you really in?' They're in the risk control business. And so the position size and the trailing stops and all the rest of it, you know, stop losses however you set them, trailing or not, a little diversification — right, or at least, you know, a certain number of positions that you can manage that don't reduce your edge but don't have you exposed to too few things. So yeah, here we are again, Jeff, we're back. Like, it's heartwarming. Like, whenever we don't get here, I'm going to go, 'Boy, we're never going to have that guy on again.' You know, it's just — it's like table stakes for traders, isn't it? If you don't understand that you're in the risk control business, then you're not a trader, you're just not going to get it.
Right. We like to combine a few different disciplines. You know, seasonality is our foundation. We look at fundamentals, you know, both stock and sector as well as, you know, economic and technical analysis, you know, policy like monetary and government policy as well as sentiment. I like the Investors Intelligence for market sentiment. We use MACD to confirm buys and sells for our seasonal trades, and we look at old-school chart analysis for stop losses and exits, you know, consolidations. I mentioned the election gap, you know, as a point for the S&P and NASDAQ and the market in general. And then, you know, one of my father's old-school exit strategies is sell half on a double, which is more geared towards the small and, you know, more speculative trades. For our sector trades, we have sell targets that we put like 10% above the historical performance. For some of the trades, we have trailing stops that we use the charts with, and, you know, we'll give more room to smaller, thinner, you know, smaller caps, thinner-traded stocks, more like a 20% type of in that area type of stop. But it's still an art. There's no exact science. You know, I'm looking at VWAP a little bit more these days. We've looked at pivot points. I rely on colleagues and other analysts, traders that I know and trust. I look for other ideas there. You know, I'm not so proud that I can't check on someone else's analysis that I respect and use that for my own trading. And I don't trade like, you know, day trade or anything. I pretty much trade what's in our newsletter. I kind of — I mean, I eat as much of my own cooking as I can fit in.
Yeah, and just for our listeners' sake, you mentioned MACD and VWAP. MACD, moving average convergence divergence, right? Whether — how moving averages behave relative to one another. And VWAP, volume-weighted average price, over what, 30 days or so?
Usually. I also look at the anchored VWAP where you pick a point, you know, like say, you know, say the election gap, you know, the November 5th close or something, or the low in January, or, you know, whatever, you pick a date or a time frame or nine-month, you know, you look at a bunch of them. But, you know, MACD, moving average convergence divergence, is an interesting thing. It was invented by the late great Gerald Appel and carried on by his son Marvin, who retired as well, who was a friend. I knew Jerry as a kid. But it's in his original research, it's to be used as a confirmation of another reason to buy or sell a security, whether it's fundamental, seasonal or, you know, whatever. A lot of people use it just by itself, and it's really to be used in conjunction with another indicator or another analysis or another reason that you might want to purchase or, you know, enter or exit a position.
That brings up an interesting point I was going to ask you about, was what's one of your nuggets or indicators that you feel like gets misinterpreted the most?
It's probably the Santa Claus rally. Yeah, they just think it's any year-end rally. They don't — people, a lot of people don't realize that it's just the last five trading days of the year and the first two of the new year. It's not the December rally, it's not the year-end rally, it's not the rally from Halloween to whatever. It's the last five days of the year, basically, the, you know, between around Christmas and New Year's, where a lot of the world, a lot of the people on the street and in the business tend to take off, and you have some, you know, prop desk pros, traders in there picking up bargain stocks that are oversold from tax-loss selling, and there's usually this little rally of about one and a half percent or so in the S&P. And when you don't get that, it means that the traders, the pros that are in there working when everyone's out at Christmas parties and New Year's, they're concerned about the market, something else is going on. So that's probably the most misinterpreted. And I think the 'sell in May and go away,' people forget about the other side of that, which I point out: you got to buy in October to get your portfolio sober. So, you know, October is the buy, is really more important than the sell in May. We don't go away, we reposition in May. We tighten up stops, we limit new longs, we get rid of underperformers. It's kind of a spring cleaning type of thing. We do that between sort of our end of the best six months sell signal for DOW with S&P, and that ended the best eight months for NASDAQ, which goes from November to June, and we use MACD for that to confirm those entries and exits in and out of the best months.
Right, cool. Yeah, I'm glad you brought up the 'sell in May and go away' because, yeah, you know, obviously that one — I mean, who goes away in May anymore? Like, you know, you don't — like nobody's — I wish I could, but, you know, there's trading to some degree at all. I think people maybe, and you could tell me, but misinterpret that one as like — like what you just said, you know, there's that — it doesn't mean you sell on May 1st, it doesn't mean that the market goes down immediately.
If you look at our seasonal research, now Yale invented the best six-month switching strategy in 1986, which is most of the market's gains are November to April, whereas the market kind of goes sideways May to October. I present on this all the time, there's lots of charts. But basically, you know, the old saying, 'sell in May and go away,' is an old British saw, right? You familiar with the rest of it?
No, I'm not. 'Sell in May and go away' — you gotta save me here.
Yeah, come on back on St. Leger's Day. St. Leger's Day is the day of the St. Leger Stakes thoroughbred horse race, the final leg of the British Triple Crown, which occurs in mid-late September, and basically heralded in the beginning of the London season. I don't know if you ever watched Downton Abbey and that stuff, but, you know, London was pretty much built on a swamp, and if you've been there in the summer, you know, it kind of gets hot and whatever, and they didn't used to have air conditioning back in the days. So the bankers and merchants and
Aristocrats would all leave London and go up to the country in May, and they'd do their fox hunts and their horse races and their parties and all that stuff, and then they would come back after the St. Leger Stakes race and start again with the business of the London season. It kind of runs similarly to close to the Memorial Day–Labor Day period where we show market volume. The summer doldrums, as we call them, kind of dries up, and we see the market tend to waffle. We don't all go away in May, but I don't know, kids go to camp, people take vacations. My wife and I are already looking at what we're going to do next summer, right? This summer, are we going to go to a national park? Are we going to the beach again? Are we going to go to Europe? You know, what are we doing to get away? And everyone does it. The Wall Street goes out to the Hamptons, and you have this sort of, you know, vacuum or, you know, low volume, which is what creates that period. But it's not down; it kind of goes sideways, actually. You see the market tend to have this mid-July peak, which we had very, you know, specifically last year. There's something we call Christmas in July, which is the last few days of June through the first nine trading days of July. We see that sort of, after the mid-year shuffling of the Russell in the beginning of July, we see that sort of sell-off from mid-July through mid- tends to occur there, and you have the worst two months of the year, August and September, October turnaround, and, you know, that's what sort of creates that vacuum, that flat-to-weak period where the market's more vulnerable to downdrafts from May to October, and especially July to October.
When you're assessing all these tendencies, you know, these seasonal tendencies, how far back does this data go? Is it like a hundred years, or is it the 1800s, or the 1700s? How far back does it go?
That's a great, great point, great question. Some of the data we have goes back to 1833. There's other people that have data that goes back a lot further that I use for the four-year cycle stuff that comes out of the old Cowles Commission, that's Jack, Andrew Jackson's administration. But I do show a chart, and I'm going to, I'll get around to, you know, this, where we show that the data that I have goes back to 1901, that I really triple-checked for the Dow and S&P is to, you know, 1930. We use the close of '29. Some people have stuff that's older. I think the data is a little bit questionable, but if I show this, this pattern of the one-year seasonal pattern from 1901 to 1949 versus 1950 or 1949 forward, and it's like the reverse. It's like buy in May because it was a whole different economy driven by farming and agriculture, and you see the market, you know, as all the money's flowing into the economy with the buying of fertilizer and seed and hiring of people and borrowing of money and fuel and all the planting, and then it sort of peaks at harvest time in late September. That flips with the industrial, military-industrial complex, as Eisenhower told us back in, you know, after World War II, where you see that sort of sell in May or the sideways pattern May to October. So we look, we go back to post-World War II, '49-'50 for some things, for most things. We'll look a little bit further back. We're looking at the presidential cycle, and then, you know, when NASDAQ started in '71, and we also like to keep things current. We look at the most recent 21-year period rolling forward, and we use 21 instead of 20 because it's an odd number and you don't get any 50 percents, you know, 10 up, 10 down kind of type of thing, and we compare over different time frames. And when we look at the monthly patterns, if you look at, you know, back to 1950, back to '71, or 30-some odd years, and then to 21 years, and you see a consistency of a pattern over those three different time frames, then you're on to something.
I see. So if you go back, you know, it sounds like maybe, you know, '49 or '50 is sort of the modern era, right? That's, that's, that's like the oldest date that has any resemblance to how the economy might behave today and how the market might behave today.
Agreed. One would, one would think that that wasn't enough data points, and yet here it is, here we are.
Like to establish, like establish like a seasonal trend, you know, how is, how is 75 years not enough?
Because it's only 75. It's not like 7,500 or 750, even, you know, it's, it's, uh, all right, 750 years ago, yeah, that we don't, we don't get to do that. There was no such thing as, as like indoor plumbing, man.
Exactly, exactly. That's my point. So you gotta look at, you gotta look at things, you know, from a realistic standpoint. You have to compare to what people are doing. I mean, you know, you had communication was people there. I mean, Inauguration Day used to be March 4th because, you know, John Adams had to take his horse and buggy from Massachusetts down to DC. It took him a couple weeks to get there. You know, you can't have that compared to, you know, Zoom call, right, right, tweeting. I get it. I get it. I'm just, I'm talking strictly statistically speaking.
