Best S&P Performance Historically Happened Now

November hasn’t been living up to its reputation as one of the best months for U.S. stocks. Equity investors have been fed a cornucopia of negative news that has been difficult to digest, including the outcome of the “fiscal cliff,” the front page photos of rioting in the eurozone, and the escalation of geopolitical risk in the Middle East.

As important as it is to stay informed on global events, don’t let short-term events affect your long-term investments. It may be more profitable to let seasonal trends guide your decision making. Take a look at the bar chart below, which shows three-month rolling returns for the S&P 500 Index during the past eight decades.

Going back to 1928, the best three-month time period to invest in the U.S. stock market has been November through January. On average, stocks have climbed 3.34 percent during this period. The December through February time frame has also been a historical gain for stocks, averaging 2.49 percent.

Some market experts chalk it up to the Santa Claus rally in which investors tend to make adjustments for tax purposes or put their year-end bonuses to work in the market. There’s also the January Effect, when small-capitalization stocks outperform their larger counterparts.

In addition to these historical trends, there are plenty of positive reasons to be bullish on stocks this year. Alexander Green, Investment U chief investment strategist, lists 10, including the accommodative policies of the Federal Reserve, low interest rates making stocks attractive relative to cash, little inflation, stabilization of housing prices and the S&P’s compelling price-to-earnings of 12 times.

Regardless the investment reason, for stocks, it appears that now may be the most wonderful time of the year.

The S&P 500 Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies.

About Frank Holmes 267 Articles

Affiliation: U.S. Global Investors

Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., which manages a diversified family of mutual funds and hedge funds specializing in natural resources, emerging markets and infrastructure.

The company’s funds have earned more than two dozen Lipper Fund Awards and certificates since 2000. The Global Resources Fund (PSPFX) was Lipper’s top-performing global natural resources fund in 2010. In 2009, the World Precious Minerals Fund (UNWPX) was Lipper’s top-performing gold fund, the second time in four years for that achievement. In addition, both funds received 2007 and 2008 Lipper Fund Awards as the best overall funds in their respective categories.

Mr. Holmes was 2006 mining fund manager of the year for Mining Journal, a leading publication for the global resources industry, and he is co-author of “The Goldwatcher: Demystifying Gold Investing.”

He is also an advisor to the International Crisis Group, which works to resolve global conflict, and the William J. Clinton Foundation on sustainable development in nations with resource-based economies.

Mr. Holmes is a much-sought-after conference speaker and a regular commentator on financial television. He has been profiled by Fortune, Barron’s, The Financial Times and other publications.

Visit: U.S. Global Investors

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