Posted by ARQ Wealth on November 11, 2014 in ARQblog
The month of October historically has proved to be quite volatile, and this year was no different. From peak to trough, the S&P 500 benchmark dropped 9.9% during the September – October timeframe, just under the official definition of a “correction.” Other indices fared much worse, like the energy sector dropping over 20% during the period.
Now, just a few weeks later, the S&P 500 has recovered to all time highs. Why did stocks rebound so quickly and decisively? Could it be that corporate earnings were relatively strong during Q3? Could it be that oil prices have dropped below $80/barrel? The answer is Yes to both.
What’s next for the market? The stock market has done quite well after every mid-term election since WWII. In fact, the average return of the U.S. stock market 12 months after the elections has been +17.5%, almost double its long term average.
Aggressively investing one’s entire portfolio in equities based on historical trends is certainly not a wise decision for most investors, but the data is worthy of consideration.