August is typically a lesser performing month for the S&P 500, only to be outdone by September. September is historically the worst performing month of the year for the stock market. August is also, historically the most volatile month of the year with September following suit to a lesser degree. For the aforementioned reasons, the dog days of summer that lead into the Autumn months find the market with lesser volume and suspect moves. But history is not always a proven guide.
With one full week remaining, the Dow Jones Industrial Average has gained 1.5% in August, the S&P 500 index is up 2.1%, and the Nasdaq Composite Index has advanced about 3.6 percent. Of all the months whereby the S&P 500 would achieve a new record high level, August and September were the unlikely months for such an achievement, nonetheless, here we are. Additionally, the S&P 500 finished the week above the previous record closing high. All in all, the S&P 500 is up some 6.6% YTD, recapturing all that it has lost since the February-March correction. It has been a long, hard-fought battle for the S&P 500, climbing a wall of worry that seemed ever growing with each President Trump tweet, threats of tariffs and the implementation of certain tariffs, fears of inflation, a flattening yield curve and more. Even so, the S&P 500 managed to do what it historically does, following the trajectory of corporate earnings. On the other hand we have heightened levels of volatility, which I’ll get to a bit later.
Since the correction commenced back in February, there have been a host of market pundits, economists, analysts and fund managers making the case for a bear market. With every month that passes and every headwind put before the market/investors, would-be market forecasters offer a plethora of rationale for further market declines or at least a market that would be flat to down in 2018. The rhetoric hasn’t curtailed much since February, despite the trajectory of the S&P 500 since and as we close out the final trading week of August.
In a recent article by Finom Group (for whom I am employed), I offered up one of the infamous permabear perspectives that are consistently found with era. David Stockman has been warning about this bull market cycle that is the longest in history. He’s been committed to his warnings since 2010 at the very least.
Within the article titled Political Headlines & Permabears vs. Record Setting Bull Market, I demonstrate David Stockman’s many headline-grabbing forecasts since 2010. All of his forecasting projected a bear market is upon investors and that they should reduce risk. But Stockman is just one of the many permabears outlining and forecasting doom for investors. In fact, there is an entire web-based publication called ZeroHedge that is dedicated to highlighting and headlining fear as its means of fostering a doom and gloom perspective for investors. One thing that most permabears have in common is a rooted conspiracy theory about the government and/or the market.
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