Four Year Rule

The Four Year Rule gets its name from the length of a U.S. president's term of office.
The rule says that an attractive buying opportunity appears in the stock market about every four years, in the year of the mid-term U.S. congressional election, often in the fall of that year.
According to the Four Year Rule, the market generally begins going up soon afterwards, and peaks two to three years later.
According to the Four Year Rule, the U.S. stock market - and in turn the Canadian market - generally has a below-average performance during the first two years of a four-year U.S. presidential cycle. That's because newly elected or re-elected presidents use the first two years of their terms to clean up any lingering problems. That way, they face fewer problems in the second half of the term, and improve the chances of an election victory for themselves or their chosen successor.
According to the Four Year Rule, this pattern creates uncertainty in the first two years of the term, and holds the market down or leads to a setback. Often, this period of sluggishness or retreat culminates in an attractive buying opportunity, which materializes around the time of the mid-term election, between the two presidential elections.
In the second half of the term, the administration reaps the gains it earned through harsh action in the first half. Political and economic conditions improve, so the market generally has an above-average performance in the election year and the pre-election year.