Published By Banyan Hill Publishing | | | | Published By Banyan Hill Publishing | | | | Pumpkin Spice & the "Seasonal" Stock Market Effect By Charles Sizemore
Chief Editor, The Banyan Edge | Banyan Nation, Pumpkin spice latte is back!
Now, I realize this is a little out of character for me.
I normally drink straight black espresso in the morning and, as a point of pride, disdain novelty or flavored coffee. I consider even the act of adding sugar or sweetener to coffee an affront to the culinary gods.
And yet I somehow make an exception for my pumpkin spice latte — or “PSL” for short. Perhaps it’s because it makes me think of cooler temperatures … or because carving the Halloween jack-o-lanterns is the highlight of my year. Or maybe it’s just because it tastes amazing.
But at any rate, the first sight of pumpkin spice is an unofficial start of fall for me.
I’m pondering this as we enter what is historically the weakest month in the stock market… A “Seasonal” Stock Market Seasonal effects are a well-trod area of technical analysis. You’ve no doubt heard the maxim to “sell in May and go away.”
The market has traditionally performed better in the November through April half than in the May through October half. And historically, September has been the weakest month of the year on average.
Looking at S&P 500 data going back to 1950, stocks have fallen an average of 0.8% in September. Of course, averages are averages, and any given year can be a very different story.
In 2010, the S&P 500 was up a monster 8.7% in September, and in 1954 and 1998, it was up 7.6% and 6.2%, respectively. But September has also been a month with a particularly large number of real blow-ups...
In 2022, 2008, 2002 and 2001, to give a few recent examples, the S&P 500 was down 8.9%, 9.6%, 11.0% and 8.2%, respectively. And there were some equally nasty humdingers in the ‘70s and ‘80s too.
Over the past 73 years, we’ve seen 32 positive Septembers and 41 negative Septembers.
Now, should you take this as a cue to liquidate your portfolio and bury your cash in mason jars in your backyard?
No. That would be absurd, and you should never make major portfolio moves based on the slightly higher probabilities that come with calendar effects.
But, you should take it as yet another cue to take risk seriously.
August wasn’t a great month this year, and much of the enthusiasm that drove the market’s strong first-half performance is appearing to dissipate. The Federal Reserve is struggling to get inflation under control.
And for crying out loud, even deep discounter Dollar General is complaining about lower consumer foot traffic — and about shoppers prioritizing necessities over discretionary buys. (Dollar General also reported disappointing earnings on Thursday, sending the shares sharply lower.)
When even Dollar General is telling us that consumers are tapped out, how bad must it be?
We’ll get a recession when we get a recession. That might be now, or it might be several quarters down the road.
We’ll know when we know. But it makes sense to be cautious, here and now, and to focus on only your highest conviction investments.
And about that, let’s see what investment opportunities the rest of the team looked into this week. | | | Jason and Kelly Adams are just an ordinary, middle-class couple with three children who live in Charlotte, NC.
Yet, thanks to a little-known income-boosting secret, they turned $64,000 into $1.3 million in just 10 years by becoming FIRE’d!
What does FIRE’d mean … and how did they use it to become millionaires? Click here now to find out. | | | Weekly Recap  - 3 Silicon Valley Companies — 3,500% Gains?
Silicon Valley wasn’t always “the Valley.” Not that long ago, it was just another anonymous swath of Northern California. A handful of up-and-coming tech companies made their home there, ignited a boom and the rest is history.
A similar transformation is happening today in other parts of small-town America. As manufacturing is being “reshored” to the United States, companies are making major investments in small American towns for the first time in half a century, creating fantastic opportunities to profit.
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Fed Chairman Jerome Powell fired a shot across the bow this past week, telling reporters: “We keep at it until the job is done.”
The “it” is raising interest rates, and the “job” is lowering inflation. Powell is driving the point home that rates will likely be going higher from here. But what does that mean for our portfolios?
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The Fed’s battle with inflation is far from over. After Powell’s speech at Jackson Hole, Mike Carr points out three key ways the Fed is watching inflation. But inflationary environments tend to lead to volatility in stocks. And this should bring plenty of short-term trading opportunities for investors.
- Sell These “High Yield” Time Bombs Today
Investors are hungry for “high-yield” stocks, but the truth is that way too many stocks fit this description for them to be truly valuable. Adam narrows in on three high-yield, low-quality stocks you may want to go ahead and sell.
(He also announces his brand-new book: Endless Income: 50 Secrets for a Happier, Richer Life. Learn more about the research behind Endless Income here.)
Labor Day Is Coming!  Labor Day was always a curious holiday to me because we celebrate workers by not working.
This would be like celebrating Memorial Day by forgetting about fallen soldiers, rather than remembering them. Or celebrating July 4 by pledging newfound allegiance to the King of England.
It might not make sense, but it is a good opportunity to unplug for a day and get away from the noise of the market.
We too will be taking the day off on Monday, but look out for a note from me in the morning!
Then we’ll be back in action on Tuesday.
Enjoy your long weekend!
Regards,
Charles Sizemore
Chief Editor, The Banyan Edge | | | Tired of earning a paltry 0.4% interest on your hard-earned savings?
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