If it’s true that the Fed is finished tightening, what does that implyfor the equity market going forward? While our view has been that it would be a positive, the historical record on the subject is not especially encouraging. According to Ned Davis Research, Inc., from the end date of the last 13 tightening cycles (going back to 1929), the S&P 500 Index has been down 10 times and up 3 in the ensuing six months, and down 9 times and up 4 in the next twelve months. The average decline for six months was 4.98%, while for twelve months it was 3.34%...
our attention to September, where the long-term record and our own recent experience suggest reason for caution. Historically, September has been the weakest month of the year, and the only one in which the Dow hasshown negative returns on average since the 20th century began. Goingback even farther, since 1886, the Dow Industrials have only been up about42% of the time in September, compared to an average of 58% of the timefor the other eleven months. We have speculated in past commentaries about the reasons that September has been weak more often than not, but have been unable to draw any firm conclusions. The odds may be especiallystacked in favor of September being weak this year, since August was so strong. According to market strategist Bob Farrell, in the fifteen yearssince the late 1960s that the DJIA gained 1.8% or more in August (as it did this year), the month of September showed a loss every time.
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our attention to September, where the long-term record and our own recent experience suggest reason for caution. Historically, September has been the weakest month of the year, and the only one in which the Dow hasshown negative returns on average since the 20th century began. Goingback even farther, since 1886, the Dow Industrials have only been up about42% of the time in September, compared to an average of 58% of the timefor the other eleven months. We have speculated in past commentaries about the reasons that September has been weak more often than not, but have been unable to draw any firm conclusions. The odds may be especiallystacked in favor of September being weak this year, since August was so strong. According to market strategist Bob Farrell, in the fifteen yearssince the late 1960s that the DJIA gained 1.8% or more in August (as it did this year), the month of September showed a loss every time.
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