"The Presidential Election cycle is one Wall Street truism that has historically proven to have merit for investors," explains money manager, advisor and market historian Jim Stack.

In his InvesTech Market Analyst, the advisor reviews the basics of this cycle, its historical merit, and what the Presidential cycle portends for the market's action between now and Election Day.

"Since we are in the midst of an election year, this cycle warrants review. During the 4-year Presidential Election cycle there is a characteristic variation in annual stock market returns that is evident in historical data and actually makes sense when one thinks about it.

"Basically, it boils down to just 'good politics.' Politicians worth their salt understand the goal: get any
bad economic news over early during your term and have the economy back on track and humming along
by Election Day.

"Consequently, the worst stock market performance typically occurs in the first two years after a Presidential Election. The third year, as politicians begin gearing up for re-election, is usually the
best year on Wall Street by a wide margin, and the only year where the average gain in the S&P 500 tops
10%.

A funny thing happened this afternoon, but it won't be funny to the bulk of investors. Late this afternoon, the frustration and panic started setting in. You can blame a lot of it on many things, but the real fault may be the charts. The DJIA was off 165 points to 12,855.71 and the S&P 500 was off even worse, down 20.59 at 1,397.67.

The market sell-off was small early on but then reached certain sell levels that had been prior resistance levels on the way up. These numbers have been rounded for ease:
When the S&P 500 didn't hold right at 1,410.00, that added more pressure. Then, when 1,405.00 didn't hold, it added on another wave of sellers, and now 1,400 will act as a stead line of resistance, maybe beyond today. But it sure looks like we just lost the first cushion and moved out of that S&P up-trend after the 1,400 level was violated.

Was there news? Sure. Word came today that one of the suicide bombers in Iraq had been a Guantanamo POW; we also got word of an earthquake in Japan. But that darned dinosaur water, or black gold, just won't quit rising even when you get news that looks like it could fall. Today's higher oil inventories didn't do anything to stop the climb in oil prices and they rose $1.68 to $123.51 per barrel .

Many of these market whips come and go, but it sure looks like the pessimists and the bears just got the upper hand over the bulls today.

A new report from Ned Davis Research shows that companies that consistently raise their dividends provide the strongest returns for investors over the long run.

But I'm still not a fan of dividends: They're incredibly inefficient when it comes to tax-season, making share buybacks far superior as a means of returning value to shareholders of an undervalued stock -- and if the stock isn't undervalued, why own it in the first place? It's my belief that shareholders in a company should always prefer buybacks to dividends -- if you'd rather pay a big tax to receive cash instead of receiving a larger stake in the company, why do you own the stock in first place?

The Wall Street Journal reports on the study: "Since 1972, members of the Standard and Poor's 500-stock index that consistently increased their payouts, or started making them, rewarded shareholders with a yearly average 10.4% total return (stock-price appreciation plus dividends). Those that didn't boost dividends clocked 8.2%. Most of the difference came from superior stock performance." (emphasis added)

Think about it: Companies that are able to boost their dividends consistently are also, generally (A) increasing their profits and (B) not blowing their cash flow on ill-advised acquisitions. Both of these would seem to be, I believe, much more strongly correlated with outstanding returns than returning cash to shareholders with taxes.

This month saw great improvement after last month's disaster. Having to conclude my findings on a specific month end day, or any day, depending on the news, sometimes distorts results. For example news on March 31 sent the market down and on April first my picks shot up an unusual amount; hopefully the trend will continue.

My riskiest stock pick Newcastle Investment Corp (NYSE: NCT) was down the most in March but recovered about 35% of the loss in April leaving Valero Energy Corp. (NYSE: VLO) the dubious honor of being my worst performer, down over 30% in the first four months of the year.

April showed improvement as many companies reported positive earnings reports or beat expectations.

The Dow Jones Industrial Average gained some ground in April as did the Standard & Poor's 500 Index, and the technology heavy NASDAQ Composite Index was up with stocks like Apple, Inc (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG) improving significantly on very strong reports. Google is up over 25%.

Most of my picks improved. Higher food prices no doubt helped Bunge Limited (NYSE: BG) which recaptured losses moving up 23% from its recent bottom. My two winners Raytheon Co. (NYSE: RTN), the high tech defense contractor, and Reliance Steel & Aluminum (NYSE: RS) were joined by a third, Anglo American plc (ADR) (NASDAQ: AAUK) which had a 10% swing entering positive territory.

There is a well known investment strategy that says that investors should by stocks at Halloween and sell them at the end of April. Statistically, most market gains have occurred during that six month period, so the theory says to buy stocks then and when May comes, you should sell.

This time around, the 'buy at Halloween' plan would have been a bad move. With markets reaching their highs at the end of October, investors would have ended up buying the market high only to watch the market collapse. Now that we have finally had a good month, loyalists to the theory would have you sell.

I got a call from a client who asked what I thought about implementing the strategy on his account. I actually think that the market may be setting up for a nice spring and summer rally. It appears that the market has the potential to keep moving higher. While the economy slowed down, it didn't enter a recession, and corporate earnings have generally beaten estimates. Coupled with the economic stimulus checks that are supposed to be arriving in our mailboxes any day, this looks like the year that the 'sell in May and go away' strategy isn't going to be successful.

How about 'buy in May and watch your portfolio go up up and away!'?

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 4/30/08

Stocks started out in slightly positive territory on what appeared to be more good news out of a major institution. Then oil inventories showed an unexpected decline, sending oil up up over $2.00 per barrel to $110.56 and later even above $112. Throw in a couple of weak earnings reports and the fears that earnings season is going to be tough, and the bears got to rule today.

Below are today's unofficial closing levels for major US index levels:

Dow: 12,328.49, down 0.38%; Nasdaq 2,322.12, down 1.13%; S&P 1354.56, down 0.8%

Full 52-Week Lows.

Bed Bath & Beyond, Inc. (NASDAQ: BBBY) saw a sharp drop today, and that was before the earnings news was out after the close. A Piper Jaffray downgrade led to the sharp drop today.

Citigroup, Inc. (NYSE: C) proved to be a typical example of what is becoming redundant. The company lined up a sale of $12 billion of dollars worth of leveraged loans for some 90 cents on the dollar.

Mark Hulbert at MarketWatch wrote about influential investment newsletter editor, Richard Band's outlandish forecast that the Dow Jones Industrial Average may end the year at 16,000. This very bullish estimate of a 33% gain in the index from someone who's not typically a headline-grabber made Hulbert take note.

Hulbert, who tracks performance of some of the best newsletters in the business, has been tracking Band's Profitable Investing newsletter since 1991. In that time period, Band returned a 8.6% annualized return compared to an almost 11% annualized return in the Wilshire 5000.

Not bad but not outstanding. So why is Band all bulled up?

Technical factors have Band singing a very upbeat tune. The first, according to the article "has to do with the stock market's internal characteristics when it hit a low earlier this month. Band argues that that low possessed "many striking technical resemblances to the great bear market bottoms of the past.""

So, how does Band recommend playing the markets at this important juncture. He recommends a couple of market ETFs. Specifically, Band points to the iShares Russell 1000 Growth Fund (NYSE: IWF), the iShares MSCI Emerging Markets Index Fund (NYSE: EEM). Another recommendation is in a fund I've never seen before (but maybe I should): the Selected American Shares (SLASX). This fund, a 4-star fund according to Morningstar, invests in US large caps and has returned an annualized return over the past 5 years of almost 13%.

Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

In fascinating endowment news yesterday, Harvard University turned to one of its former investment stars to take the helm of the Ivy League's biggest endowment of $35 billion.

Currently chief investment officer at Wellesley College, Jane Mendillo has been tapped o become the president and chief executive of Harvard Management Company. She fills in the slot vacated by Mohamed El-Erian, the emerging market bond guru, who left last year after less than two years in the job to return to his previous post with Bill Gross' PIMCO.

Famed uber-investor Jack Meyer racked up impressive returns in his tenure at Harvard Management Company during the 1990s. According to Wikipedia, Meyer grew an endowment "worth $4.8 billion to a value of $25.9 billion (including new contributions). During the last decade of his tenure, the endowment earned an annualized return of 15.9%."

Not too shabby.

It's great to see a woman take over the helm of such a high-profile investment fund. The best part of this whole move is that Mendillo is a Yale grad!

Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

"Gloom is thick enough to cut with a knife," says market historian and seasonal timing expert Sy Harding, whose timing system has just triggered a new intermediate-term buy signal on stocks. Here, in his Street Smart Report, the contrarian explains why he believes we are now near a market low.

He also looks at four new ETF index positions he has established in his portfolio. "The slowdown continues. Foreclosures soar. Debt problems are spreading to corporate and credit card loans. The housing collapse continues. The problems are affecting employment.

"And of course the credit crunch continues. Gasoline hit a record high $3.26 a gallon last week. Consumer confidence, and corporate CEO confidence is at multi-year lows regarding the economy.

"The gloom and doom has spread from financial publications to local newspapers and magazines, now featuring stories of layoffs and local plant closings, local small businesses suffering, comparisons to previous bad times, even occasionally to the Great Depression.

"Is the gloom thick enough? Are other conditions in place indicating we are near a market low? Here's why we think so:

MarketWatch has an interesting opinion piece out on JPMorgan's (NYSE: JPM) re-negotiated deal for troubled investment bank, Bear Stearns (NYSE: BSC). Entitled "Dimon's Dog ", the article's thesis is that while JPMorgan's CEO, Jamie Dimon, initially had a great score scooping up Bear on the brink of insolvency, his renegotiated deal leaves the company with a significantly weaker hand than it had just one week ago.

According to MarketWatch's David Weidner, "Somewhere, Gordon Gecko is hanging himself with his suspenders."

It seemed that Dimon had it in the bag. A quick and dirty deal, approved by Bear's board with pressure from the Federal Reserve Board -- it appeared a done deal.

But then something happened.

$2 had tremendous shock value. Regardless of how that values the company, you can buy a hot dog for $2. The market didn't believe it could happen and I guess what happened is that JPMorgan couldn't believe it either even though the firm committed to taking on Bear Stearn's obligations whether or not Bear shareholders agreed to the deal. Check out Sheldon Liber's article on the subject.

As investors, we've been bombarded over the past couple of months with negative news coming from Wall Street banks that either underwrote, invested in, or had clients who invested in bad mortgages or some derivative of them. While these firms have written down billions in assets on their balance sheets, investors like Joe Lewis, the Australian billionaire who put $1 billion into Bear Stearns (NYSE: BSC) and promptly saw his investment drop almost 100%, have been left holding the bag.

Bloomberg is out this morning with an article which details some of the fallout from this process. According to Bloomberg, after the Internet bubble burst, 39,800 jobs at big banking firms were eliminated during the same period. The number climbed to 90,000 in the next two years, according to the Securities Industry and Financial Markets Association.

While not everyone cries over millionaire bankers losing their jobs, there is certainly fallout that hurts everyone dependent on a healthy economy. One recruiter interviewed by Bloomberg predicted that the total headcount reduction could be more than 100,000 in a few years. Lawyers, realtors, and mortgage brokers are feeling the heat.

According to Bloomberg, the biggest cutters have been:

• Citigroup 6,200
• Lehman Brothers 4,990
• Bank of America 3,650
  

I tend to think that from a cycle point of view, Wall Street cuts harshly only to rehire when things pick up.

Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

Circuit City (NYSE: CC) will face more downward pressure on its shares when it is booted from the S&P 500 next week. A number of large institutional investors sell-off holdings in companies that are not in the index.

The company faces another problem. Its suppliers are starting to get nervous. According to The New York Post, "If manufacturers and distributors start to yank credit and demand cash payments for shipments of flat-screen TVs, video games and iPods, it could precipitate a 'downward spiral,' said Scot Ciccarelli, an analyst at RBC Capital Markets."

Shares in Circuit City, which traded at over $30 less than two years ago, now change hands at $4.38. In the quarter ending November 30, the retailer had an operating loss of $207 million on sales of just over $2.9 billion. The company's cash position dropped to $483 million from $740 million in the period ending February 28, 2007. The company does not have much of a balance sheet buffer to cover deepening losses.

Stick a fork in it, Circuit City is done.

Douglas A. McIntyre is an editor at 247wallst.com.

At each century mark I like to post something special to note the occasion. This is my 600th post since lead editor Amey Stone asked me to join her original blogging team. That was a little over two years ago and I must say, it has been a fascinating experience from atop AOL's giant soap box.

Although investors have had to withstand a tremendous amount of turmoil in the market place, and not just the stock market, there is much to report that is very positive on this Good Friday. So, in no particular order I give you the following to consider.

• The stock market closed up yesterday, and for the week, with the Dow Jones Industrial Average settling in at 12,361.32, up 261.66. The NASDAQ closed at 2,258.11, up 48.15 and the S&P 500 Index finished at 1,329.51 up 31.09.
• The stock market being up at all after so much bad news and given the longer weekend is a miracle. I would have thought traders would have wanted to be out of the market for the stretch. The Dow is above 12,000 and all things considered that is good.
• News from Iraq shows signs of improvement and while Osama bin Laden may still be issuing hateful video tapes, he is not doing so from a five-star hotel and is likely to perish in the rubble of his hiding place.
• Crude oil reached an all-time high price this week, but by Thursday had retreated more than 10% dropping below $100 per barrel. The reason for the retreat was fear about a recession, but I think I will take the lower prices as a positive regardless of the reason.
• We have a vibrant presidential campaign that has stimulated interest among young and old alike with three candidates each offering something new.
• In sports, March Madness is upon us and the NBA play-offs are just around the corner. The boys of summer have started to loosen their limbs for the long stretch to October and the steroid noise has settled down to a whisper, at least for now.
• The majority of economists now seem to believe we are in a recession. That is a good thing because we need capitulation before we can improve. I do not think we will hear the president capitulate, but maybe he has and just can't bring himself to use the word.
• Spring is here and the days are brighter longer.
• Even though many industries have seen a downturn in business, many are still booming.
• The devalued dollar has had the predictable effect of improving our trade imbalances.
• Unemployment is still relatively low.
• AOL finally got it's much improved stock section out of beta test mode this week, now up and running.
• Interest rate cuts (which I have my doubts about) are serving to stabilize financial markets. I think that there will be bad news from the financial markets for the rest of the year, but very little will shock us any more. If the shock effect is gone -- implied by the up market yesterday and to my great surprise last Monday, than we may have turmoil and bad news but after a few more gyrations the stock market will move up.

Among the many good things to report, there is value in the market among many sectors. There are many stocks on my shopping list worth buying. These I will leave for post 601...

Have a GOOD FRIDAY!

Sheldon Liber is the CEO of a small private investment company and the design and research principal for an architecture and planning firm. He writes Chasing Value and Serious Money columns.

Today the market is closed for Good Friday. Maybe the market can use the day off.

The market is bipolar. Rising from stratospheric highs to crushing lows at the flick of a switch. Mind you, sometimes it takes a big event to turn the market on and off and sometimes it doesn't take much of anything. That's what makes the market so maddening to follow.

Bloomberg News argues that the market's reaction indicates that Federal Reserve Chairman Ben Bernanke's strategy of aggressive interest rate cuts is working since commodity prices had a huge sell-of this week.

"The Standard & Poor's 500 Index posted its first weekly gain in a month, and the dollar leapt from its lowest level since 1973 after the Fed stepped in March 16 to rescue Bear Stearns Cos. (NYSE: BSC), the fifth-largest U.S. securities firm, and expanded its role as lender of last resort to embrace the biggest dealers in Treasury notes," the news service reported. "The Reuters/Jefferies CRB Index of 19 commodities tumbled 8.3 percent this week, the most since at least 1956, after touching a record on Feb. 29."

But any rejoicing may be premature. Consumer confidence remains shaky amid continued worries about the real estate market. Applications for unemployment benefits soared to their highest level in nearly two months, according to the Associated Press. In short, there is plenty to worry about.

The trick for investors is not to panic and do anything rash. Markets aren't volatile forever and do eventually sort themselves out. Getting to that point may cause quite a lot of pain in the meantime.

Is the stock market more volatile than in the past? Many investors believe so based on the sharp intraday swings of recent days.

However, it really comes down to how you define volatility. If you look at the median monthly high-low ranges (in percent) for the S&P 500 index going back to 1980, and compare those averages to this year's values, only one month stands out so far.

In January, the range between the high and low was 13.70% (of the average of those two numbers), almost double the 7.60% monthly median going back 28 years.

The high-low range for this year's first month also topped previous highs of 13.09% in January 1987 and 12.62% in January 1980.