Home About Archives RSS Feed

@theMarket: Statistically Speaking

By Bill Schmick
iBerkshires Columnist

Wall Street is awash with statistics on any given day. Some are useful while others simply add to the level of noise, but on occasion we do get some hints of where the markets are going by looking at past data.

Take the month of January for example, historically it has been a good month for stocks.

It is a time when new money supposedly floods into the stock market, pushing the averages up. That gets investors excited. They begin to anticipate a big up year. Some say that if the Dow Jones Industrial Average is higher after the first five days in January, then the month will be positive. Others argue that if the month finishes on an up note so will the year.

The S&P 500 Index has been up 13 of the last 20 Januarys, so statistically the odds are in our favor but not by that much. What may add weight to those probabilities is the market's performance in 2013. The S&P 500 Index was up 30 percent last year (not counting dividends).

Whenever that has occurred in the past (75 percent of the time since 1928), the next year's January gained on average 2.4 percent. There have been four years since 1995 that the S&P 500 closed with over 20 percent gains and all four years saw average gains of 2.5 percent.

As for the market's predicted performance in 2014, there is more good news ahead thanks to the gains of last year. Since 1950, there have been 17 instances when the S&P 500 was up more than 20 percent in a year. The same index finished positive the following year 14 times (82 percent probability). There have been four years since 1995 that the S&P 500 closed with over 20 percent gains and in all four years the average gain was 2.5 percent.

There is little to worry about on the domestic or on the global front right now.

Washington politicians are playing nice for now. This year's elections will short circuit any tendencies by the tea party to create another crisis in the first quarter. The economic numbers in the U.S., Europe and Japan are encouraging. Those are the three markets that investors should be focused on. Europe is lagging our own recovery by a year or two. Japan represents enormous upside in the years ahead and we here at home have entered a secular bull market.

So far the jury is out on January. Thursday was a down day and Friday we recouped some of those losses. I am betting that next week sees some further upside. However, somewhere out there a pullback is lurking. I expected it to happen in December but at its worst, the market was down less than 2 percent.

Interest rates continue to rise with the 10-year U.S. Treasury now over 3 percent. I believe rates are heading much higher. Part of the reason that the stock market continues to gain is that bond holders are finally getting religion. They are selling bonds and buying back into equities.

It is too hard to call the movements of the market in the short term but history seems to indicate that we should expect to see a few more days, if not weeks, of gains before this rally comes to a close. In any case, my advice remains the same for readers — stay invested.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

0 Comments
     
News Headlines
Mount Greylock Project Ahead of Schedule, on Budget
Lanesborough's Finances Benefit From Health Insurance Changes
Cheshire, Adams Battle Over Elementary School Closure
Community Helps Bounti-Fare During Storm
Berkshires Beat: Berkshire Athenaeum teams up with Boston Bruins for PJ Drive
Berkshire Medical Center Sits Atop National Quality Ranking
Biz Briefs: Lowe's, Central Berkshire Habitat Team Up for Women Build Month
McCann School Budget Reflects Hikes in Fixed Costs, Health Insurance
Cheshire Meets Housing Rehab Application Requirement
Williamstown Fin Comm Combs Through FY18 Spending Plan

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (222)
Independent Investor (301)
Archives:
February 2017 (8)
February 2016 (1)
January 2017 (6)
December 2016 (2)
October 2016 (1)
September 2016 (9)
August 2016 (5)
July 2016 (7)
June 2016 (7)
May 2016 (5)
April 2016 (7)
March 2016 (8)
Tags:
Housing Commodities Currency Stocks Recession Bailout Metals Stimulus Europe Retirement Debt Congress Crisis Banks Federal Reserve Japan Rally Deficit Wall Street Economy Greece Taxes Selloff Jobs Energy Debt Ceiling Election Europe Oil Fiscal Cliff Interest Rates Pullback Stock Market Markets Euro
Popular Entries:
The Independent Investor: Don't Fight the Fed
The Independent Investor: Understanding the Foreclosure Scandal
@theMarket: QE II Supports the Markets
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: How Will Wall Street II Play on Main Street?
Recent Entries:
@theMarket: Market Stalls at Record Highs
The Independent Investor: What Happens to Your Pet After Your Death?
@theMarket: Danger Zone
The Independent Investor: 'Watch the Gap Please'
@theMarket: Stock Markets at Historical Highs
The Independent Investor: Medicare, Why You Need More Than Part A & B
@theMarket: Trump Tweets Tweak Markets
The Independent Investor: All You Need to Know About Medicare
@theMarket: The Deals Begin
The Independent Investor: A Circus by Any Other Name Is Still a Circus