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Planning & Economy

Happy Thanksgiving

December 3rd, 2019

I’m sure you’ve heard of it: “Sell and go away in May”. We get asked about it every year. Traditionally the period beginning May 1st through October 31st is weak for the Dow industrials. Peek at the figure 1.

Wealth Management Firms Near Me - DJIA Wealth Planning And Investment Opportunities Graph IMG 1 Astonishing isn’t it? $10,000 every November 1st and sold every April 30th grew to $1,135,173, WOW!

Had you invested $10,000 in May of 1950 and sold every in October 31st grew to $10,684 – kind a lame, huh?

The result is astonishing if only they mattered in a substantive way.  If you had invested in January 1st 1950 and held it until 2018, what happened? Look at figure 2., You would end up with $1,100,827, a $34,347 difference compared to buying and selling based on the season. And, if you take the effect of taxes and transaction costs, you’d be better off leaving it alone, in my opinion.

Does seasonality ever matter?

Yes, during recessionary periods, almost always.

Recessions DJIA % Change: Weak Period DJIA % Change: Strong Period
1990 -8.1% 18.20%
2000 -15.5% 9.60%
2001 -15.5% 1.00%
2007 6.60% -8.00%
2008 -27.90 -12.40%

Financial Consulting Near Me - DJIA Financial Consultant Investment Opportunities Graph IMG 2Congratulations we are at the start of the Strong Season. Let’s hope the recent market bullishness continues unabated until April. Then we’ll enjoy spring and summer as there is not recession in sight the warm season may be more enjoyable.

Our portfolios are exhibiting slightly higher levels of cash than in the recent past.

Carlos Dominguez – CERTIFIED FINANCIAL PLANNER™, Portfolio Manager, RJFS

 

 

When you get a minute try out our risk discovery tool – tell your friends

https://windsorwealth.management/my-risk-o-meter/

Data courtesy of Dorsey Wright, Trader’s Almanac, Seeking Alpha and Thompson Reuters: graph courtesy of Windsor Wealth. – Due to rounding error some of the results are slightly different than the raw data in Trader’s Almanac

https://seekingalpha.com/article/1183461-seasonal-patterns-in-stock-markets-319-years-of-evidence

This information is hypothetical and is provided for informational purposes only. It is not intended to represent any specific return, yield or investment, nor is it indicative of future results. Links are provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. The preceding information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Carlos Dominguez and not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Investing always involves risk. There is no assurance that any investment strategy will be successful. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Investors cannot invest directly in an index. DJIA, The Dow Jones Industrial average® is a price-weighted measure of 30 U.S. blue-chip companies. Past performance may not be indicative of future results.

My-Risk-O-Meter® is a registered trademark of Windsor Wealth, LLC. #5,675,451

 

 

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