Dow Jones 10 year cycle patterns

 Dow Jones 10-Year Cycle

Typically, the US stock market has done well in years ending in ‘5’ (like 1975, 1985 or 1995). The stock market seems to follow a 10-year cycle. The chart above depicts the average 10-year course of the Dow Jones over approx. 100 years (i.e. the yellow part shows the average course of the years ending in ‘5’).

The years ending in ‘5’ have done extremely well in the 20th century. They produced an average gain of 34.61 %. This is the half of the entire average decennial gain! There was no losing year.

The following chart shows the performance of all years ending in ‘5’, not only for the 20th century, but also for the 19th century. It should be observed that there was no such phenomenon during the first eight decades in the 19th century. However, we may say that this is long ago.

The 5th Year in the Decennial Cycle
Data sources:
Dow Jones Company
Schwert, William: Indexes of United States Stock Prices from 1802 to 1987, Journal of Business, 63 (July 1990) p. 399-426