One of the most interesting and entertaining aspects of investing is the myriad of proverbs that, as is to be expected with proverbs, express a general truth about markets. Think “Don’t fight the Fed”: when the Fed wants to support or restrict risky assets, it usually prevails; or “It’s a stock market, not a stock market”: individual stocks often have surprisingly different return flows, which offer investors the opportunity to invest capital in companies that are doing well and avoid companies that have problems. And, of course, “Sell in May and Leave,” which talks about the seasonally weak stretch of stocks that has historically begun with May and ended with October. While May has been coming and going, we’ve been thinking about this adage, and we’d argue about May’s rap bum because of that, as we delve into what has been the worst two-month stretch of the US stocks: August and September. Consider that since 1950, the S&P 500 has been, on average, flat in August and down 0.5% in September (the only negative month in the index during this 70-year period), while that the months of May, June and July have been positive. Regardless of the time of year, the market usually faces any risk, and today is no different, as we are faced with the Delta variant of COVID-19, rising inflation and regulatory repression in China. For these and other reasons, we wouldn’t be surprised to see some volatility over the next few weeks. But earnings are growing, interest rates are low, fiscal and monetary policy is supportive (see above: “Don’t fight the Fed”), and consumers and businesses are on par with cash. For these and other reasons, we remain bullish on US stocks.
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The views expressed are those of Brinker Capital and are not intended to be investment advice or recommendations. For informational purposes only. Brinker Capital Investments, LLC, registered investment advisor. 2208-BCI-8/9/21
Tagged: Tim Holland, weekly cable, market outlook, US equities, S&P 500
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