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History and the Market

September 29, 2010 – 4:51 pm

As September fades with just two more days left of trading in the month the doomsayers who feared the historical data going back many years that September is traditionally the worst month of the year are being embarrassed. The market is good at that.

History, as I have said many times, tends to repeat itself but it is not something that is your sole gauge of what an investor should do. It is one factor out of many.

So far, this September is proving to be one of the best Septembers in history, just like August was one of the worst and July one of the best for their respective months. The only conclusion you can take away from these facts is that we have had a very volatile quarter for the stock market.

However, that is past not prolog. If you review historical data the fourth quarter is traditionally the best or second best quarter of the year. I wish it was that simple. It is better to look at the fundamentals of the individual stocks and the underlying value of the entire market with a strong dose of critical thinking about the economy.

Stocks are inexpensive especially as earnings keep coming at high levels, and the economy, while it may not be robust, it is still growing. The world economy is in better shape than the U.S. The market is likely to rally with this kind of backdrop. Again, I wish it was that easy.

Good Trading
Steve Peasley

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