“Will you set the table?” When my wife says this, I know I’m about to do a little work, but soon it will be time to eat. The market blues of August and September hopefully set the table for good times ahead.
Stocks snapped a five-month winning streak in August after the S&P 500 ended negative 1.8%. And while the monthly stock winning streak is over, upside momentum may continue.
Although stocks went negative, they did so in an orderly fashion, which is a good sign of healthiness for the market. The market’s overall trading volume was low, telling me investors were not panic selling.
While the stock’s monthly winning streak has ended, there might still be some solid months ahead. Historically, after the end of a five-month positive streak, the market has gone up an average of just over 7% over the next six months. Interestingly, this same scenario has happened six times since 1950, and all but one were positive over the next six months, according to LPL.
Don’t get overly worried about September because it is generally a dud. September is historically the worst month of the year for stocks since 1950. Stocks have averaged a negative half percent and have finished negatively more times than not. The good news is that historically, stocks have rebounded from a weak September with a pretty strong October. The October-November-December period is the strongest part of the year for the market. This and the fact that the market usually does well just leading up to the US presidential election gives me optimism.
While the next few week’s outlook is mixed, I am encouraged by the historical market trends around the presidential election cycle and the frequent strong returns of the year’s final quarter. With this short-term outlook, I’m maintaining a slight overweight to fixed income (bonds) over stocks in the accounts I manage. I’m not negative or bearish towards stocks but more neutral to them with an expectation of upcoming buying opportunities.
I had a table-setting misstep while doing a college internship in England. I was trying to be helpful and set the table but was quickly corrected on how the “British do it.” In my mind, I was thinking, “This from a country that doesn’t even know which side of the road to drive.” I didn’t say it because I still wanted to eat. Let’s hope the market isn’t as picky about the table setting and serves up something great for the year’s end.
Have a blessed week!
Dr. Richard Baker, AIF®, is the founder and executive wealth advisor at Fervent Wealth Management.
Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.
Opinions voiced above are for general information only & not intended as specific advice or recommendations for any person. All performance cited is historical & is no guarantee of future results. All indices are unmanaged and may not be invested directly.
The economic forecast outlined in this material may not develop as predicted & there can be no guarantee that strategies promoted will be successful.
Fervent Wealth Management is a financial management and services entity in Springfield, Missouri.
