We are just a week away from Thanksgiving and then the holiday season really kicks into high gear. While many headlines warn of overvaluation and Grinch predictions of market pullbacks, Runnymede remains bullish. Since last summer, we have been beating the drum on strong global earnings driving stock markets higher and higher. Nothing has stopped the above trend profit growth and now we are in the strong seasonal part of the year.

November and December are typically the best months of the year

For the last 30 years, November and December have been two of the best months to be invested in the stock market. December is the best month with seldom a down month to be found with only 5 of the last 29 ending in negative territory. The Santa Claus rally is usually the end result with an average return of 1.89% for the S&P 500. Market inflows tend to drive market higher as profit sharing plans may be fully funded and year-end bonuses find their way into brokerage accounts. This year should be no different especially given the strength of the economy. Here are the seasonal trends to be aware of in the chart below:

S&P 500

 

“Bull Market Sign” by ota_photos is licensed under CC BY-SA 2.0

By Chris Wang