We’re wrapping up the month of October with about a 5% gain in the S&P 500, and it’s clear that the "Sell in May" crowd that likes to spook investors into going to cash over the summer and not coming back to the market until after Halloween is going to be scrambling to make up for lost time—and lost gains!
But the good news is that the last several years we’ve had a November dip that was your final chance to buy before the market took off again. In 2010, the Dow pulled back about 350 points in November before resuming its rally, in 2011 it was 1,000 points and last year it was 500 points.
So if we do see a November dip, it’s going to be one to buy, since the final missing ingredient for the current market rally was corporate earnings, which have finally materialized in the third quarter for the S&P 500 and are anticipated to accelerate in the fourth quarter.
And of course, we’re also enjoying the seasonally-strong time of year. We should expect an uptick in pension funding as we head into year-end, and the holiday season also tends to make consumers and investors alike more optimistic—which should fuel increased spending on Main Street and higher trading volumes on Wall Street.
So please have a wonderful Halloween holiday with your friends and family, and please make sure to read tomorrow’s Emerging Growth November issue for a full discussion of what to expect as we head into the final few months of the year.