In my view, we are still in a secular bear market and currently at a point of extremely high risk. We
have now passed the period of seasonal strength for the year – a time when spirits are high and the
market performs better than at any other time on a historic basis. A study in the December 2002
issue of the American Economic Review reported that the average stock market returns from
Halloween through May Day (the so-called "winter months") were significantly higher than equity
returns from May Day through Halloween (the "summer months"). The findings were that the
summer months’ returns have averaged so much less than those of the winter months that almost
all of the stock market’s long-term returns have been produced during the winter months. The
obvious implication is that simply going to cash between May Day and Halloween will have only
minor impact on long-term returns while dramatically reducing risk.
I was going to change the above barometric-like message...
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