How to beat the stock market!

It's a truism that if you miss the five best days of the year in the stock market, you'll get mediocre returns.  We write about this regularly. Because one can't know when the five best days are, one needs to stay invested all the time. It's a great anti-timing argument.

But what if you knew with some confidence when the best days would be?

According to a staff report at the New York Federal Reserve Bank, most of increase in the S&P 500 since 1994 has occurred on the days just before the announcements of the Federal Open Market Committee!  Taking out the three day window before the announcements leaves the index essentially flat for the past 17 years (the data ends in 2011).

Interestingly, the nature of the FOMC announcement didn't matter.

I haven't finished reading the paper for their attempted explanation of the phenomenon, but the topic will be in the next issue of our Investment and Trust Newsletter.