Tuesday, May 26, 2015

No Summer Rally............

No Summer Rally

Be on guard in coming days against advisers talking about a summer rally in the stock market.

That's because the "summer rally" that, like clockwork, they start referring to around Memorial Day is entirely a figment of their imagination. If your adviser actually thinks he has statistical validity, who knows what else he is also claiming?

Big as the market's current rally potential may appear to be, it actually is smaller than the comparable potential for many other months. The current potential is well below average, in fact.

That stands to reason, of course, since the coming three months come right in the middle of the seasonally unfavorable summer season.

There may be a way to use your adviser's talk of a summer rally to become a better investor: Fire him, and resolve to subject any of your hunches to rigorous statistical scrutiny. You'll find that, just like the summer rally, many, if not most, of them are pure fiction.

And remember your sunscreen!

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