Finally… after the longest stretch since 2014, the S&P 500 managed to pull back over the course of the last couple weeks, to a point where the market became oversold and ripe for a “sale.” So what’s next?
Well, the seasonally weak months of the year ended on Halloween, starting the seasonally strong six months going into the end of 2017 and into the new year.
As you can see below, the concept of seasonality is extremely helpful when managing your retirement assets. $10,000 invested only during the seasonally weak months of the year has only grown to $11,092 in 67 years! On the other hand, that same $10,000 invested only during the seasonally strong months turned out an relatively larger return to say the least, at $986,871.
While the months between May and October are usually a struggle for the market, August and September are the historically worst months of the year for the market in a post-election year. Much to the contrary, 2017 bucked this trend. What was originally expected to be a weak summer turned into an uncharacteristically strong spell for stocks.
This “trend-bucking” typically means good things for the seasonally strong months of the year, and since we’re standing on the doorstep of these historically positive months, the intermediate and long-term trends are looking very strong for the market.
With that all said, it’s always possible to see additional pullbacks and “double-dips” in the market. After all, stocks fall to the tune of -5.0% roughly three times per year. So it wouldn’t shock me to see additional short-term weakness resulting from geopolitical concerns, tax and/or healthcare reform woes, or a bad earnings report here and there.
Still, as long as the primary trend is up, we want to be treating these pullbacks as opportunities to buy in the short-term, all while investing for the long-term.
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The opinions mentioned in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial adviser and strongly consider interviewing a fee-only financial advisory firm, prior to investing. Past performance is not guarantee of future results. Economic forecasts set forth may not develop as predicted. The views and opinions expressed in this commentary are those of Adam D. Koos, CFP® and do not represent the views of TD Ameritrade Institutional and its affiliates. Investing involves risk including loss of principal.