Explore Our
“Off The Wall” Blog
Unique, straight-forward, unfiltered opinion on topics of concern for individuals with newfound wealth.
3 Things to Remember About the 4th Quarter
There’s plenty for investors to watch during the last three months of the year.
Get your holiday gift lists started, break out the cool weather clothes, and get ready to set the clocks back. Nothing says fourth quarter like a 4:30pm sunset. Ugh.
It’s also time for a quick portfolio check-up. According to a recent Bespoke Research report, there is some data that I think provides a few reasons why you may want to make sure your portfolio is ready for the rest of this year.
The Presidential Cycle
The typical blueprint for an average election year has the market peaking on April 6th. This year, the Standard & Poor’s 500 (S&P 500) peaked on April 4th. From there, the average year sees the S&P 500 hit a spring low on May 28th. This year? June 1. Then, the average election year sees a summer rally that peaks on September 7th. This year the S&P 500 hit a summer rally high on September 14th.
So while we are not quite there yet, October 10th usually sees another dip in the market off the summer rally and from there, goes up through the end of the election year, Bespoke says.
The average return during the average election year? North of 19 percent.
This is something to consider if you have some idle cash in your accounts. No assurances, but it’s interesting to see such a similar pattern emerging between this year and the average election year.
The October Effect
Again, with a hat tip to the smart folks at Bespoke, we see that October usually ends up being an OK month when you look at the last 20, 50 and 100 years for the Dow Jones Industrial Average (DJIA).
Over the past 20 years, the DJIA posts an average monthly return of 1.75 percent about 70 percent of the time. Not bad. Over the past 50 years, the average return moves to 0.69 percent about 62 percent of the time, and for the trailing 100 years, it’s at a 0.15 percent return 61 percent of the time, according to Bespoke.
So while it’s not the most amazing return number over the past 100 years, it’s at least positive a good portion of the time. Not bad.
P.S. November and December look good too! But more on that below.
Winning 4th Quarter Returns
Following the above time frames, Bespoke also looks at the average quarterly return for the DJIA.
And guess what?
The 4th quarter has the best average return of all quarters. Over the past 20 years, the DJIA posts an average quarterly return of 5.29 percent about 80 percent of the time. Pretty nice, huh? Over the past 50 years, the average quarterly return comes in at 3.41 percent about 76 percent of the time and for the trailing 100 years, it prints a 2.04 percent return 67 percent of the time.
So as you are getting ready for Halloween (I’m dressing up as Psy and learning the Gangnam Style dance), breaking out the cooking gear you use once a year for the turkey, and getting that gift list together, take a second to look at your portfolio and analyze whether you are invested correctly for what could be an exciting end to 2012.
David B. Armstrong, CFA, is a Managing Director and Co-founder of Monument Wealth Management, a full-service wealth management firm located just outside Washington, DC in Alexandria, Va. Follow David on his blog which can be found on his website, on Twitter at @MonumentWealth and @DavidBArmstrong, and on the Monument Wealth Management Facebook page. Securities and financial planning offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for individual. To determine which investment is appropriate please consult your financial advisor prior to investing. All performance referenced is historical and is not guarantee of future results. All indices are unmanaged and may not be invested into directly. Bond values and yields will decline as interest rates rise and bonds are subject to availability and change in price. Alternative investments may not be suitable for all investors and should be considered as an investment for the risk capital portion of the investor’s portfolio. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses. There is no assurance that the investment objectives of this program will be attained. Stock investing involves risk including loss of principal. Asset allocation does not ensure a profit or protect against a loss.
Read the article on U.S. News & World Report here! >>
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Capital Management, LLC [“Monument”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. No amount of prior experience or success should be construed that a certain level of results or satisfaction will be achieved if Monument is engaged, or continues to be engaged, to provide investment advisory services. Monument is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.
A copy of the Monument’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.monumentwealthmanagement.com/disclosures. Please Note: Monument does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Monument’s website or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.
Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your Monument account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your Monument accounts; and, (3) a description of each comparative benchmark/index is available upon request.
Please Remember: If you are a Monument client, please contact Monument, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.