There’s a saying: “March comes in like a lion and out like a lamb.”
Of course, the old proverb refers to the fact that the weather is usually cold at the beginning of the month and then gradually warms up into spring.
But the weather isn’t the only notable change that March brings.
In ancient history, the ides of March was the 74th day in the Roman calendar. It corresponds with our March 15.
The day was marked by religious observances and was known as a day to settle debts.
In 44 B.C., the date became notorious for the assassination of Julius Caesar.
This was a major turning point in both Roman history and the history of the world.
For stock market investors, will the ides of March bring about a change to the current drawdown?
This Is Shaping Up to Be a Historic Year
Growth investors have felt a lot like Julius Caesar this year.
The stock market is off to its fourth-worst start to a year in the past century.
As of Monday, the S&P 500 Index was down by 11.8%.
The only years that stocks got off to a worse start were the Great Depression, the 2008 financial crisis and the coronavirus crash.
This is shaping up to be a historic year.
It started with the highest increase of inflation in 40 years.
Then the Federal Reserve blindsided investors by admitting it was wrong about inflation.
To make matters worse, Russia’s invasion of Ukraine is sending the prices of commodities like oil, wheat and nickel skyrocketing.
But here’s some good news for investors to think about.
When the market starts the year in a steep decline, it typically stages a strong rally throughout the rest of the year.
Out of 14 other occurrences with heavy sell-offs to start the year, the market came roaring back in all but two of them.
And the rallies are even higher after the market has been hit the hardest.
I clearly remember how the bears predicted doom and gloom in 2009. But the market rebounded 48.5% as the global financial crisis waned.
I also wrote on these pages two years ago that 2020’s sell-off would lead to a sharp rally in everything.
I called it the “mother of all bubbles” back then. The market rallied 37% the rest of the year.
I wasn’t around for the 14.1% sell-off in 1935. But the market staged a whopping 64.6% rally after that sell-off.
There’s Blood on the Streets
Today, the events are different. But the sentiment is the same.
There’s a different reason for every bear market, but it always involves the decisions of irrational humans.
To quote the French writer Jean-Baptiste Alphonse Karr, “Plus ça change, plus c’est la même chose,” — the more things change, the more they stay the same.
Investors are worried about war.
They’re worried about inflation.
They’re worried about a hawkish Fed.
But these concerns are largely priced in.
This is a sell-off for the history books. There’s blood on the streets.
The Fed sees this. And I expect it to acknowledge how events have changed its outlook in its meeting this week.
The investors who should “beware the ides of March” this year are the bears.
Regards,
Editor, Strategic Fortunes
Morning Movers
From open till noon Eastern time.
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