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Commentary eLetter 2/22/2019 — Historical Tendencies

If you are a regular reader of our eLetters (and we hope you are) you’ve heard us talk occasionally about strong and weak parts of the calendar year; specifically that, in general, the last quarter of a given calendar year tends to be a very good time for stocks to perform well. The first quarter is also good while the mid part of the year is often weak. Indeed, there’s even a thing called the ‘January effect’ which says that if the first week of January is positive and that is followed by a positive month of January, the year will then also see positive returns for equities.

We frequently remind you that the 6 days or so around the end of a month tend to be strong for stocks, and suggest that you keep that factor in mind as you reallocate your portfolios.

So, let me mention again that these are tendencies. That means that they often work, but that one cannot ever count on them as a mechanism to rely on.  A tendency just means that it often works.

With that in mind, as I was looking at a chart of strong and weak days of the month, I thought you might appreciate another group of tendencies, so here goes.

The following table represents the annualized returns for each calendar day of ALL months on the S&P Index* since 1950:

19th:  -34.69%

20th:  -7.10%

21st:  +4.91%

22nd:  -12.04%

23rd:  -2.40%

24th:  -3.65%

25th:  -6.84%

Consider that the S&P 500 Index has averaged gaining 9% per year over the past 70 years.  If every stock market day was created equal, we’d see +9% for each of the above calendar days, but instead every single one falls short of the 9% ‘average’. This certainly provides us [...]

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