Allen's Law

George E. Allen, lawyer, raconteur and poker-playing intimate of Presidents (F.D.R., Truman, Eisenhower), has made some money in the stock market over the years. Not, however, on any inside tips from his friends. His secret: Allen's Law of Politico-Market Cycles.

Stock prices, he contends, always rise in the third year of a President's administration. At the beginning of a term, everyone wishes the new Chief Executive well, but disillusion quickly sets in. The honeymoon ends, many pledges go unfulfilled. The market reacts by going down. The off-year election adds to the upset as the opposition flails at the White House and the President sometimes finds himself unable to influence congressional races. In his third year, says Allen, a President either starts running for his own re-election or begins thinking of his party's prospects to hold the White House. In either case, the pump priming begins.

Allen's plottings of market trends going back to 1945 generally support the idea, as does the currently climbing market. Allen confidently predicts that the price of stocks will rise from 20% to 30% this year, and that they will do so again in 1975 regardless of who wins the 1972 election.

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