The Market Is About to Have a Tom Brady Moment
I don’t binge-watch the latest hit TV show, or flip through channels on the television.
One of the only pieces of entertainment I enjoy watching is sports.
And the best thing about it is seeing teams and players find their groove.
You know it when you see it.
Tom Brady, quarterback for the New England Patriots, having the football with two minutes left is one of those times.
I don’t like Brady or the Patriots. I’m a Minnesota Vikings fan.
But there’s something about watching him hit his stride with two minutes left in the game to win it all.
If you cut off the TV prior to those final two minutes, it would mean you missed the best part of the game.
Knowing Brady is about to get the ball tells us not to turn off the TV just yet. We want to see one of the best players in the sport hit his stride.
And right now, you don’t want to let the historically volatile month of October keep you from benefiting as the stock market finds its own groove.
Basically, the stock market is set to enter its own Brady-like comeback mode, and you don’t want to miss it.
Let me explain…
The Most Volatile Month of the Year
I know October has been a rough month.
It’s the most volatile month of the year, based on historical data.
So it goes without saying that this volatility was somewhat expected.
But what comes next is also expected — the market is set to hit its stride.
It’s as consistent as Tom Brady having the football with two minutes left. And no matter how many people know about this phenomenon, it continues to work.
In other words, don’t tune out of the market just yet.
The next six months, November through April, are historically the best time of the year to invest in the stock market.
A Simple Back Test
It sounds too good to be true.
Six months out of the year being better than the other six months?
But there’s plenty of data to back it up.
The most compelling, to me anyways, is a simple back test.
Imagine you had placed $10,000 into the Dow Jones Industrial Average in 1950. You only invested from November through April — the best six months — and went to cash from May through October.
Then in a separate account, you did the reverse for the worst six-month period, May through October.
Over the last 68 years, your $10,000 investment in the worst six months, May through October, grew to $11,031, or gained 10.3% over 68 years. That’s the cumulative return, rolling your capital over each year.
On the other hand, that same $10,000 investment in your November through April account grew to a whopping $1,008,721 — nearly a 1,000% gain.
Once again, this is just investing during those six months and going to cash the other six months.
It’s remarkable the difference each six-month period has.
Get Ready for a Tom Brady-Like Comeback
From May through October this year, the stock market is basically flat, which is in line with its “worst six months” title.
That’s why I’m expecting the next six months to follow their usual trend and continue to be the main driver of growth in the stock market.
So, don’t let October’s volatility keep you out of the market just as it is hitting its stride.
Now’s the time to invest and stay invested to benefit from the rally that is set to take place.
Chad Shoop, CMT
Editor, Automatic Profits Alert