Past Performance

[TommyIV]

Using the past to guess the future: Today stocks had an ugly start to the fourth quarter thanks to poor manufacturing numbers. What has a poor start to October meant for stocks in the past?


Here’s how the stock market tends to trade in the rest of the year after an ugly October start

 

[TommyIV]

I have trust issues with guarantees. I have a friend who over uses guarantees and seems to be wrong in every case. Its truly impressive.

This article crunches number of every year the S&P 500 was up 15% from the year's start to the end of October and finds those years added an average of another 5% in the remaining three months of the year. Very interesting although not true for every major index. But last year's divergent Holiday action where indices plummeted rather than were boosted during the holiday season has got to have investors less comfortable with keeping their money in stocks during the anniversary period.

It could be possible that long term trends are more powerful than short term nightmares, but the trend pointed out by this article has more to do with momentum and market conditions of the previous years. There may be similarities to the situations of those years but its difficult for me to ignore that there are also unique dynamics to markets these days. Easy access to trading for everyone makes markets more liquid, investors can automate there account to react to price changes in an instant, and the fact that machines produce an impressive amount of the trading.

In the next three months the S&P 500 will rise, fall, or not change much at all. I guarantee it.

Dow and S&P 500 are guaranteed to rise at least another 5% in the next 2 months — if this 70-year old trend holds