History Says It’s Time to Buy!!

Nov 18, 2014 | Securities

History Says It’s Time to Buy!!

History says it’s time to buy!!

According to Stansberry Research, we are highly likely to see outsized US stock market returns over the next few months and years. According to S&A, if they are correct, you do not want to miss out on the opportunities that could present for those positioned appropriately.

In accordance with the observations of one of their analysts, buying the S&P 500 after it has fallen below its long-term trend line, i.e. 200-day moving average (DMA), leads to outsized gains.

Stanberry Research Analyst Steve Sjuggerud noted, “it is rare to see a stock market boom for as consistently and as long as the one we have seen over the past few years. Until the middle of October, before the markets most recent 10% correction, the S&P 500 had stayed above its 200-DMA for 477 trading days. Given the extreme length of the most recent move higher in stocks, the recent breakdown actually points to higher prices ahead”, not lower prices as many have been signalling.

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Take a look of the chart below:

(Source: Stansberry Research)

The green circles demonstrate the end of every period where the S&P stayed above its 200-DMA for at least 300 trading days. We can see that, historically, the US market soared after an extended stock market boom ended.

Check out this table:

3-Month

6-Month

12-Month

24-Month

S&P 500 Average

2.4%

5.0%

10.3%

21.3%

After 300+ Day Bull Market Ends

4.2%

8.6%

18.7%

43.2%

(Source: Stanberry Research)

The table shows the difference in returns on stocks over different time frames in contrast with investing after long bull markets end. It is clear that purchasing stocks after a bull market ends almost doubles the typical return on stocks across all durations.

This theory is also aligned with the previous article we published, which suggests the first seven months- October 1 to the end of April in the 3rd year of a US presidential election cycle is the best time to own stocks.

If you are concerned you have missed this great rally, don’t worry. Today is still a great time to purchase US stocks and stocks overall!

If you would like to learn how you can benefit from this great opportunity, contact United Global Capital today and speak with one of our financial strategists for a No Cost, No Obligation consultation on 03 8657 7640 or email info@ugc.net.au to learn how you can take advantage of the opportunities available to you.

The information contained in this report is General in nature and has been prepared without taking into account your objectives, financial situation and needs.
<a href="https://ugc.net.au/author/joel/" target="_self">Joel Hewish</a>

Joel Hewish

Joel is the founder and CEO of UGC. He is a licensed financial advisor with 15 years experience assisting clients grow, manage and protect their wealth.

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