Jeffrey A. Hirsch - Stock Traders Almanac 2013

Copyright 2013 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey
Published simultaneously in Canada

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This Forty-Sixth Edition is respectfully dedicated to:

An active user of the Almanac since the early 1990s, we first met Jordan back in 1997 as he was honing his now widely recognized and respected Magnet Stock Selection Process. One of the early adopters of quantitative screening for stocks, he did not listen when others told him you could not successfully blend value, growth, and momentum together. His tenacity, research, and dedication have paid off. The American Association of Individual Investors ranks the Magnet Simple #1 over the last 3- and 5-year periods, and #2 over the last 10 years as we go to press.

As important as market returns are, character also counts. We have known Jordan personally and worked together over the last 15 years. One of the things Jordan has focused on over the past several years is combining what-to-buy with when-to-buy. In 2012 we joined forces with Jordan, combining the insights of the Almanac with the Magnet process.

INTRODUCTION TO THE FORTY-SIXTH EDITION

We are pleased and proud to introduce the Forty-Sixth Edition of the Stock Traders Almanac . The Almanac provides you with the necessary tools to invest successfully in the twenty-first century.

J. P. Morgans classic retort, Stocks will fluctuate, is often quoted with a wink-of-the-eye implication that the only prediction one can make about the stock market is that it will go up, down, or sideways. Many investors agree that no one ever really knows which way the market will move. Nothing could be further from the truth.

We discovered that while stocks do indeed fluctuate, they do so in well-defined, often predictable patterns. These patterns recur too frequently to be the result of chance or coincidence. How else do we explain that since 1950 all the gains in the market were made during November through April, compared to a loss May through October? (See page 48.)

The Almanac is a practical investment tool. It alerts you to those little-known market patterns and tendencies on which shrewd professionals enhance profit potential. You will be able to forecast market trends with accuracy and confidence when you use the Almanac to help you understand:

• How our presidential elections affect the economy and the stock marketjust as the moon affects the tides. Many investors have made fortunes following the political cycle. You can be sure that money managers who control billions of dollars are also political cycle watchers. Astute people do not ignore a pattern that has been working effectively throughout most of our economic history.
• How the passage of the Twentieth Amendment to the Constitution fathered the January Barometer. This barometer has an outstanding record for predicting the general course of the stock market each year, with only seven major errors since 1950, for a 88.7% accuracy ratio. (See page 16.)
• Why there is a significant market bias at certain times of the day, week, month, and year.

Even if you are an investor who pays scant attention to cycles, indicators, and patterns, your investment survival could hinge on your interpretation of one of the recurring patterns found within these pages. One of the most intriguing and important patterns is the symbiotic relationship between Washington and Wall Street. Aside from the potential profitability in seasonal patterns, theres the pure joy of seeing the market very often do just what you expected.

The Stock Traders Almanac is also an organizer. Its wealth of information is presented on a calendar basis. The Almanac puts investing in a business framework and makes investing easier because it:

• Updates investment knowledge and informs you of new techniques and tools.
• Is a monthly reminder and refresher course.
• Alerts you to both seasonal opportunities and dangers.
• Furnishes a historical viewpoint by providing pertinent statistics on past market performance.
• Supplies forms necessary for portfolio planning, record keeping, and tax preparation.

The WITCH icon signifies THIRD FRIDAY OF THE MONTH on calendar pages and alerts you to extraordinary volatility due to the expiration of equity and index options and index futures contracts. Triple-witching days appear during March, June, September, and December.

The BULL icon on calendar pages signifies favorable trading days based on the S&P 500 rising 60% or more of the time on a particular trading day during the 21-year period January 1991 to December 2011.

A BEAR icon on calendar pages signifies unfavorable trading days based on the S&P falling 60% or more of the time for the same 21-year period.