The worst (or best) month to invest ?

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Taylor Larimore
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The worst (or best) month to invest ?

Post by Taylor Larimore »

"Simplicity is the master key to financial success." -- Jack Bogle
bulbul
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Post by bulbul »

September is not done yet. A big correction?
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mlebuf
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Post by mlebuf »

Hi Taylor,

This is what Mark Twain wrote about the stock market over a century ago:

OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks in. The other are July, January, September, April, November, May, March, June, December, August, and February.
- Pudd'nhead Wilson's Calendar

There are two times in a man's life when he should not speculate: when he can't afford it and when he can.
- Following the Equator, Pudd'nhead Wilson's New Calendar
----------

Mark Twain's wisdom about speculating was based on experience:

"Twain made a substantial amount of money through his writing, but he squandered much of it in bad investments, mostly in new inventions, particularly the Paige typesetting machine. It was a beautifully engineered mechanical marvel that amazed viewers when it worked, but was prone to breakdowns. Twain spent the enormous sum of $300,000 (equivalent to almost $7,000,000 in 2007 dollars) on it, but before it could be perfected, it was made obsolete by the Linotype. He lost not only the bulk of his book profits but also a large portion of the inheritance of his wife Livy.

Twain also lost money through his publishing house, which enjoyed initial success selling the memoirs of Ulysses S. Grant but went broke soon after, losing money on the idea that the general public would be interested in a biography of Pope Leo XIII. Fewer than two hundred copies were sold."

Link: http://en.wikipedia.org/wiki/Mark_twain
Best wishes, | Michael | | Invest your time actively and your money passively.
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Taylor Larimore
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The Millionaire in You

Post by Taylor Larimore »

Hi Michael:
"(Mark Twain)losing money on the idea that the general public would be interested in a biography of Pope Leo XIII. Fewer than two hundred copies were sold."
Now I know why you picked The Millionaire in You for the title of one of your books.
"Simplicity is the master key to financial success." -- Jack Bogle
bhmlurker
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Post by bhmlurker »

Many pundits predicted that there would be a pull-back this summer. Some even predicted a W shaped recovery and predicted a "re-testing of support levels at XYZ". Still others called upon the traditional "sell in May and go away", citing Summer doldrums.

Well folks, looks like those who avoided this Summer, managed to avoid 15% gain by the broad US market.
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nisiprius
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Post by nisiprius »

In Stocks for the Long Run Siegel has a good overview of a lot of these oysters-R-in-season phenomena in a chapter entitled "Calendar Anomalies." I don't remember the details but as I read the chapter, each time I started to say "Gee! That chart is so impressive and it's such a simple thing to do, maybe I really should give it a try," Siegel would comment that whatever anomaly he was discussing didn't seem to exist any more. Either they were butter-in-Bangladesh coincidences, or Mr. Market erased them, like a teacher erasing graffiti from a blackboard as soon as he notices them.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
InvestingMom
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Post by InvestingMom »

Taylor,

I hope you didn't jinx September! Ha ha.

Have a great weekend,
Investingmom
livesoft
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Post by livesoft »

bhmlurker wrote:Well folks, looks like those who avoided this Summer, managed to avoid 15% gain by the broad US market.
Remember this thread started on August 21st: http://www.bogleheads.org/forum/viewtopic.php?t=42053 ? Some folks were rebalancing out of equities after a 4% drop and 4-day recovery. Since August 17th, int'l index is up >10%, US total stock ~7%, small cap value ~9%.

Nobody can predict the future.
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Post by Ron »

When we were "gainfully employed" (unlike today, in retirement :roll: ) I contributed consistently throughout the year (in my/wife's 401k).

On the first business day of the year, we would contribute (in a lump sum, saved in the prior year) our respective IRA's.

The day of the month, or the month of the year meant very little in our investment scheme.

What was more important (IMHO) was our commitment to save/invest for the future.

- Ron
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mephistophles
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Post by mephistophles »

Ask Sudhi :oops:
Ron
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Post by Ron »

mephistophles wrote:Ask Sudhi :oops:
Now that's funny!

Is it the "season" or not?

- Ron
RobG
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Post by RobG »

like fishing... you should have been there yesterday. (Glad I was!)
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Adrian Nenu
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Post by Adrian Nenu »

The worst (or best) month to invest ?
When the financial media reaches the point of maximum paranoia indicated by numerous sensationalist articles proclaiming the end of the the financial world and small investors reach the point of maximum pessimism - they are all bailing out of the stock market. If you decide to invest and have the risk tolerance for it, use DCA because the sale might last a while and nobody can predict the lowest sale price.

Adrian
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ButWait
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Post by ButWait »

It was Sy Harding's intention to develop the market’s seasonality into a specific investment strategy, one that would work in both bull and bear markets, as the strategy that would allow an investor to continue making gains in a bull market, and to keep those gains, and then make more in the severe bear market. He began by back-testing a hundred years of market data, with the goal of determining the exact days of the year, rather than the month, that on average would produce the best entry and exit dates for investing according to the market’s seasonality.

He discovered that those best days on average are October 16 for the entry into the market for its favorable seasonal period, and April 20 for the exit from the market’s favorable season. However, those are just the best days as averaged over a very long time period. Obviously the market does not begin a rally on the same day each year, or begin to decline from a top on the same day each year. And recognition of that obvious fact is the most important aspect of his strategy. He concentrated on determining a means by which the entries and exits could be more accurately pinpointed each year.

Source: Harding, Sy. Riding the Bear: How to Prosper in the Coming Bear Market. Holbrook, MA: Adams Media Corporation. 1999.
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BlueEars
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Post by BlueEars »

My thought would be that to get an aftershock from the past carnage it will take a real negative event or set of events to set it off. I do not think equity markets are 100% emotionally driven but clearly emotions play a role. Maybe we have a nice Sept and Oct but then a modest decline in Nov -- beats me how to predict it.

In true Boglehead fashion, I'm not betting on the short term.
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