Friday, July 13, 2012

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.

4 comments:

JLM said...

Wow! Don't you wish the Fed could juice the economy as easily as it moves the market?

Stock market free tips trial said...

Nice Blog ......


Nifty Futures

Unknown said...

Great post. Glad i found this blog, I think I could learn more about Wealth management here.

Shanne @ Ed Butowsky Chapwood

Unknown said...

Hi there! I'll be looking forward for your other posts. Keep it up and more power to you. What a great post! You have such a good point of view. It is very well said. Thank you so much for sharing this informative post.

Features of Wealth Management:

*Allows customer to review risk profiles.
*Track holdings against model portfolios fro returns.
*Captures Customer’s details and risk profile.
*On approval by client they execute financial plans.
*Based on the advanced algorithms they provide tax coverage, education and insurance.
*Interfaces with banks, portfolios management systems, price vendors and other agencies.
*Provides dynamic search.
*Document Management.
*Dynamic user access control.

For more information about Cabot Money Management's wealth management services or to discuss how we can help you make the most of your assets, contact us today. Wealth Management Boston