October 19, 1987
It’s September for Pete’s sake! And, the pundits are feasting on seasonality and the fact the that bad things have happened in past Septembers and Octobers. Just because the market has had a few bad experiences in these months (like September of 1929 and October of 1987), the “nattering nabobs of negativism” are out to nail the coffin shut on this bull market. Long-term stats would also support September as being a bit troublesome for the market. According to data compiled by Mark Hulbert (“Here’s what history says about the stock market in September” MarketWatch,8/29/14) in the last 100 years the average September has produced a loss of 0.8%. However, the other 11 months averaged gains of 0.8%. In and of itself, these statistics really would argue in a compelling way for a buy and hold approach.
September and October could be horrible
This is far beyond my ability to forecast. What is important is the fact that we have gone for a long time without a real meaningful correction. When the ‘big one’ comes, it will be a complete surprise (even though it should not be), scary and completely normal. Now, if you are anxious about the possibility, amidst the constant chirping from the ‘nabobs’, you might consider the following:
1) It is all about comfort, your comfort. It is no disgrace to take some chips off the table, especially after the run we’ve seen in the market.
2) If you own individual stocks, comfort comes with knowing what you own and why you own it.
3) Finally, if it is any comfort, 1929 and 2008 were what Wade Slome (Investing Caffeine) has referred too as “100 Year Floods.” The likelihood of a recurrence after 5 years would seem to be a major long-shot, despite what you read in the papers/blogs and hear on the wireless and telly.
How comfortable are you?
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Love your quoting Agnew!
John Altman
I’ll do anything and quote anybody to make a point…even Spiro T. Agnew. When it comes to the market the media are quintessential examples of “nattering nabobs of negativity.”
We have enjoyed a remarkable run up in the market. While the indicators suggest that the run up still has some legs the odds for a correction (probably 5% -10% ?) should be increasing. It would seem prudent to take some gain off the table (maybe 25%) to prepare for forthcoming opportunities.
Sold some stock today for a slight profit trying to predict a correction, and of course it went right up. You are right, who knows when and how much?
Now I will wait for the real correction and buy back, but I will probably miss it too!
Thanks for the rational thinking Bill.