Three months in and it’s already obvious that 2014 is not going to be a repeat of 2013. January went sour fast as it plunged from 16,500 at the beginning of the month to 15,300 at the end. February did a complete turn-around when it went from 15,300 on day one all the way back up to 16,500 by the end of the month. Then March came and the market went nowhere at all. In terms of capital gains, this market this year has been dead money (see chart below). Fortunately for investors like me almost every stock I’m holding paid at least one dividend during the quarter. Those dividends ended up being the silver lining in this otherwise dark cloud.
So here we are in April already and not much money has been made by most investors. We’re also looking into the doldrums of the summer months which is so nicely summed up in the old adage “Sell in May and Go Away”. The idea here is that investors who sell their shares in May and get back into the markets in November would be much better off than investors who stay in the equities markets all year long.
This strategy is based on a history of the under performance by stocks from May to October and an over performance by stocks from November to April. According to the Stock Trader’s Almanac the Dow Jones Industrial Average has had an average return of only 0.3% during the May-Oct period and an average return of 7.50% during the Nov-Apr period. Why this happens no one really knows, but it’s been traditionally attributed to the lower volumes associated with investors exiting the stock market while on summer hiatus. But that’s only a guess. And how trading and investing will change over time due to the ever present and ubiquitous nature of the internet and the increase in mobile trading is anyone’s guess.
What I do know is that an investing strategy which includes Dividend Growth Investing will allow the smart investor to maintain a stream of income regardless of the direction of the market. And as much as Dividend Growth Investing takes some of the excitement out of investing, it more importantly takes a lot of the stress out of investing too.
This strategy is based on a history of the under performance by stocks from May to October and an over performance by stocks from November to April. According to the Stock Trader’s Almanac the Dow Jones Industrial Average has had an average return of only 0.3% during the May-Oct period and an average return of 7.50% during the Nov-Apr period. Why this happens no one really knows, but it’s been traditionally attributed to the lower volumes associated with investors exiting the stock market while on summer hiatus. But that’s only a guess. And how trading and investing will change over time due to the ever present and ubiquitous nature of the internet and the increase in mobile trading is anyone’s guess.
What I do know is that an investing strategy which includes Dividend Growth Investing will allow the smart investor to maintain a stream of income regardless of the direction of the market. And as much as Dividend Growth Investing takes some of the excitement out of investing, it more importantly takes a lot of the stress out of investing too.
Good Luck and Good Trading.
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