Categories

Investing Observation & Opinion

Tools

  • Economy & Politics
  • Investing
  • Personal Finance
  • Related Posts


    This Tech Startup Uses A Simple Formula To Decide How Much Stock To Give Employees
    Your Precious Chipotle Burrito Is About To Get More Expensive
    Million-Mile View Of Investment Value
    Why Beating The Market Is An Uphill Skate
    Shipping Firms Turn To Equity Markets As Sector Eyes Recovery
    3 Big Retail Trends To Watch For
    At Macy’s, Lessons From Walmart’s Failed RFID Attempt
    Welcome To The Unfriendly Skies
    Is Bitcoin Like High-Speed Trading?
    Meet The Guy Who Helped Add $2 Billion To Twitter’s Valuation Yesterday
    Bank Of America’s Legal Woes Are Only Partly To Blame For Its Disappointing Quarter
    Metals Stocks: Gold Wavers, Copper Edges Up After China Data
    The Best Online Tools To Track Your Investments
    How To Profit By Avoiding Common Investment Errors
    Beware Of The Walking Dead In Your Portfolio


    Record Highs In Stocks: Time to Sell? No!

    The 100-year-old Dow Jones stock index hit a record high for eight consecutive days, ending Friday.

    It was a remarkable streak. After such a run, you’re probably wondering: "Is it all over? Shouldn’t stocks be near a peak now? Should I sell?"

    My answer to all those questions, as I’ll explain, is a resounding "no."

    Stocks are not near a peak now — far from it. Based on 100 years of history, instead of selling, you actually want to buy stocks now.

    That’s because, after stocks have a good quarter, they normally have a fantastic next 12 months.

    The first quarter of this year has been fantastic. Stocks are up by double digits, percentage-wise: up 11 percent year to date. It is the best first quarter since the 11 percent gain in the first quarter of 1998 and the 11 percent gain in the first quarter of 1991.

    Based on history, the next 12 months should be pretty darn good for stocks.

    I used our True Wealth Systems database to look back at 100 years of data. Here’s what I found:

    If you bought the stock market (the Dow) any time the index rose 10 percent or more in any quarter, your stocks rose 9.4 percent over the next 12 months. That crushes a buy-and-hold strategy, which returned only 5.5 percent. (These num­bers don’t include dividends.)

    And if you bought the Dow after a bad quarter, you would underper­form over the next 12 months.

    You can see the exact numbers right here:

    Status   Index return after
    12 months
    When the Dow rose by 10% or more in a quarter +9.4% 
    When the Dow fell by 7.5% or more in a quarter +3.1% 
    Gain in all periods +5.5% 

    So the short answer is you want to own stocks after the Dow has a really strong quarter, like it just did. It means outsized gains are more than likely over the next 12 months.

    You might think it’s scary to buy stocks after such a great run recently and such a strong first quarter of this year.

    Of course, in the short term, a pullback is possible. But you shouldn’t be concerned with the short term. You should be looking a year ahead.

    A hundred years of history tell us that a strong quarter for stocks is a good sign — not a bad one — for the next 12 months.

    In short, there’s no need to sell because stocks are up.

    Good investing, 

    — Steve Sjuggerud

    This article originally appeared on March 18, 2013, at DailyWealth.com.

    Dr. Steve Sjuggerud is the founder and editor of one of the largest financial newsletters in the world, True Wealth. Since inception in 2001, True Wealth readers have made money every year with safe, contrarian investment ideas. Steve did his Ph.D. dissertation on international currencies, he's traveled to dozens of countries looking at investment ideas, and he's run mutual funds, hedge funds, and investment research departments. Steve's investment philosophy is simple: "You buy something of extraordinary value at a time when nobody else wants it. And you sell it at a time when people are willing to pay any price to get it." It's harder than it sounds, but Steve continues to be able to do just that for his readers. Click here to learn more.

    | All posts from Dr. Steve Sjuggerud

    Discuss this Story:

    Comment Policy: We encourage open discussion. Comments including racist statements, profanity, name calling or spam will be removed at our discretion. We use filters for spam protection. If your comment does not appear it is likely because it violates the policy.

    SodaStream Pops 11% On Minority Stake Sale Buzz
    Yahoo Shares A Good Buy As Alibaba Nears IPO: Analysts
    Mrs. Fields Looks Beyond The Mall
    Europe’s Gentle Clampdown On Flash Boys
    Do You See A Bubble?
    Homebuilder Confidence Misses For 4th Month In A Row
    Stocks Move Higher On Encouraging Profit Reports
    Here’s How Box Can Still Go Public In The Midst Of The Brutal Tech Selloff
    Stocks That Go Up Can Keep Going Up
    Nestle Reports Slow First Quarter
    China Gold Demand ‘On The Rise’
    Don’t Just Sit On Your Investments, Do Something
    Should Google Know Your Deepest Darkest Secrets?
    How Companies Are Using Wearables In The Workplace
    Is This Tiny Gadget The Future Of Smoking?
    Commodity-Backed Currencies? China Buys Huge Copper Mine; Russia Onshores Largest Gold Miner
    BofAML Warns VIX Complacency Suggest Stocks Fall Further
    Futures Tread Water As Geopolitical Fears Added To Momentum Collapse Concerns
    “Shadows Of March 2000″ – Goldman On The Great Momo Crash Of 2014
    Weekly Sentiment Report: Horrific? Hardly!
    Beta Earthquake
    Gold Jumps To 3-Week Highs, EUR Fades As Tensions Rise In Ukraine
    CME Sued For Giving “High-Frequency Traders Peek At Market” Since 2007
    HFT Purge Begins: SEC Prepares To “Remove” Some High Frequency Trading Firms
    GE Capital Seen Ripe For More Slimming After Credit Card IPO
    Ukraine Tensions Land Fresh Blow On Struggling Stocks
    China Targets Trust Firms In Shadow-bank Crackdown
    Citigroup Cuts 200 To 300 Jobs
    Stocks Face Earnings Blues After Tech Slide
    Europe’s Top Banks Cut 80,000 More Staff In Post-Crisis Overhaul
    Read more from Investing...

    Liberty Investor Digest

    Get today's most important
    financial headlines all in
    one place by email!



    Sources


    close[X]

    Sign Up For Liberty Investor Digest™!

    Get Liberty Investor Digest FREE By Email!

    Input your name and email address in the fields below and get today's most important financial headlines sent straight to you inbox!

    Privacy PolicyYou can opt-out at any time. We protect your information like a mother hen. We will not sell or rent your email address to anyone for any reason.