Will Stocks Soar after This Carnage?
By Dr. Steve Sjuggerud
Stocks have had a terrible 12 months… the second worst on record going back to 1950.
But does a terrible 12 months mean we should have great returns going forward?
Does the “law of averages” somehow kick in here? Does a bad year beget a good one? We crunched the numbers to find out…
At DailyWealth, we try to be optimistic. We believe opportunity always exists somewhere, and it’s our job to find it.
Of course, we know about all the bad things going on now. But we also know that great returns in stocks start in bad times. Stocks typically bottom right in the middle of recessions, for example. This recession has been going on for a while now… So are we at the middle of it yet? Is it time for stocks to soar?
Unfortunately, history doesn’t tell us what we want to hear…
A good analyst doesn’t start with a conclusion and look for facts to back it up. Instead, he looks at facts, and makes his conclusions. In this case, we looked at these facts to draw our conclusions: “rolling” 12-month returns on stocks and how they performed over the following one, three, and five years.
The reality is, stocks only performed worse than the 12 months prior just once since 1950, as measured by the S&P 500 and the Dow. That month was September 1974. Those 12 months were followed with a good 12 months… But the returns beyond that were pretty bad
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