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Historical trends bode well for July and the second half



June 27, 2009 – Comments (12)

Man this year is flying.  I can't believe that July is already here.  I usually don't put a whole lot of faith in technical analysis or seasonal mumbo jumbo, but I found the following information on the market's historical movement in July interesting nonetheless.

Historically, July has historically been a very strong month for the market.  Over the past century, the Dow has gained 1.24% on average during the month, including an average increase of 1.17% over the past two decades.  Furthermore, over the past two decades, July's returns have been positive 70% of the time.  July has traditionally been the best summer month for stocks.

July 1st also marks the start of the second half of the year.  Since 1927, the S&P 500 has averaged an increase of 3.64% during the first half of years and 3.41% in the second half.  When the S&P is positive at the halfway mark it has averaged a gain of 5.51% during the second half with the second half of the year providing positive returns 74% of the time.  This compares to the index increasing only slightly more than half of the time with an average gain of only 0.02% after a negative first half. 

Looking at historical trends, it appears as though we are setting up for positive returns during the second half of 2009 and a solid July.  Of course, I personally think that the market could run into trouble once companies start reporting their second quarter earnings, or lack there of, in the near future.  We are in a very tough environment right now and stock valuations are ultimately based upon how much money companies can make and how much they will grow in the future.  I suspect that Mr. Market is being a tad optimistic on both fronts right now.  Time will tell.

While all of these facts about the short term movement of the market are interesting, I personally prefer to purchase high quality, high yielding stocks and bonds and hold onto them rather than trade so this information doesn't really do much for me.  At least it's more productive and relevant to investing than discussing mysterious black helicopters flying around.

All of the above information is courtesy of Bespoke Investment Group.  Anyone who has never visited their website definitely should.  There's some cool free stuff on there.  Plus, they'rerunning a special promotion that provides anyone with access to some of their premium reports for free for a couple of days right now.


12 Comments – Post Your Own

#1) On June 27, 2009 at 11:34 AM, kdakota630 (29.15) wrote:

Excellent blog, Deej.

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#2) On June 27, 2009 at 12:04 PM, portefeuille (98.85) wrote:

also see this post:

Sell in June and go away


This is a long post, so here is an executive summary:
- A new method of implementing the seasonal timing idea is presented, which
recommends selling in June and going away, rather than the usual May.
- For the backtest, the total returns are 6.36%/year better than buy and hold.
- On a particular risk metric, this has less than 44% of the risk of buy-and-hold.
- This is specifically recommended for use with the S&P Equal Weight index, tracked by RSP.
- Don't give up, there's a link to a pretty picture further down the message.



anchak pointed me to that discussion board. I was not aware of the huge amount of posts that can be found there. This particular one is the 5000th (!) post by mungofitch.

Having skipped through some of the post in the board Mechanical Investing I would say that the quality of the post that can be found there is rather high.

They should post some of the stuff here. It would really improve the "caps" game. If they don't I suggest that "we" post some of "their" stuff here via copy&paste&comment ...


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#3) On June 27, 2009 at 12:43 PM, alstry (< 20) wrote:

Why would anyone look in the rear view mirror to see what is ahead of them?????

When in the history of America has tens of millions of American's been forced to take MASSIVE pay cuts???  When have our cities and states run out of money????   


You guys remined me of buggy whip manufacturers looking at historical trends in the 1900s to justify the slow down......


Soon you will learn the value of Alstrynomics.....the art of looking forward when trying to see what is ahead.

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#4) On June 27, 2009 at 12:56 PM, portefeuille (98.85) wrote:

... and there are refreshingly few comments like #3 above in that board as far as I can tell ...

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#5) On June 27, 2009 at 1:00 PM, portefeuille (98.85) wrote:

actually the contrast could hardly be greater.

logic vs. insanity and sober computer fonts vs. exclamation point massacres.

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#6) On June 27, 2009 at 1:56 PM, awallejr (39.43) wrote:

"logic vs. insanity and sober computer fonts vs. exclamation point massacres."

Love that, heheh. 

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#7) On June 27, 2009 at 3:57 PM, Rebkong1 (< 20) wrote:

great post alstry







 WAKE UP AMERICA BC WE HAVE TO UNITE TO FIGHT THIS OR LIFE AS YOU KNOW IT WILL BE sounds crazy i know..but get out of your daily routine and the media propaganda and SEE THE TRUTH 

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#8) On June 27, 2009 at 4:20 PM, Rebkong1 (< 20) wrote:

why is our government devauling the dollar at such a rapid rate???



maybe b/c of this: 

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#9) On June 27, 2009 at 4:46 PM, Rebkong1 (< 20) wrote:

and if some of you are wondering how something like this could ever take place:


well here you go


obama is tieing the knoose around bernake's neck and it is only a matter of time before they kick the table out from underneath him 

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#10) On June 28, 2009 at 2:23 AM, checklist34 (98.78) wrote:

that sell in june and go away is my kind of post, that is some seriously good mojo

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#11) On June 28, 2009 at 1:09 PM, kdakota630 (29.15) wrote:

Looks like we have another conspiracy theorist believing this Amero nonsense.

The Amero is B.S.

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#12) On June 29, 2009 at 11:30 AM, ByrneShill (83.01) wrote:

New feature on caps blogs: exclamation marks will now cost 1¢. Proceeds will go to pay state debts. Can alstry save california all by himself?

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