I'm Putting My Money Where My Mouth Is – Making it the Inaugural Pick in My Groundbreaking $1 Million Portfolio Newsletter.
I briefly noted last week that August is historically a bad month for stocks. Apparently this sentiment, which I still maintain, has room for argument. If one goes back to 1896 and reviews the monthly performance of the S&P 500 Index through 2013, it is clear that the monthly return average for August is indeed over 1%. However, if you look at 1950 to 2013, the month of August records an average decline of 0.24%. In a sense, it is a tale of two eras, with pre-1950 generating positive gains and post-1950 generating negative ones.
My take is dramatically different. I do not believe that we should go that far back in time to determine monthly performance in 2014. In my view, what is more relevant today is the direction in which the S&P 500 Index has performed in August since 2001. In general and especially in this century, some of the market’s worst-performing months have been August. To be fair, going back almost any number of years will illustrate that there are more up months than down in August. But, from 2001 – 2013, when there have been declines, the average drop has been a decline of 4.3%!
You would not buy a car that didn’t go in reverse, right? Why should investing be any different?
Having strategies and investment vehicles that can profit when the market retreats is just as important as having a car that goes backwards.
We’ve seen this fact play out in the markets lately: long-only equity portfolios will not perform well during bearish market cycles.
How much money do you want to
make in the next 90 days?