Economic Showdown Part III

by | Jan 6, 2004 | Archives

October has traditionally been a month when we see stocks markets fall.   This is based on statistical analysis (see our message about seasonality at shows that shows that basically in all major equity markets, nearly all returns are achieved from the beginning of November through the end of May.   So October is the equity markets darkest hour.

We have seen this fact repeated again and again with special highlights in October 1987 when the U.S. stock market fell 22% in one day.  

This year is special because October will see the final legs of the 2004 Presidential election run up.   The current administration will have done everything it can, beginning now, to stimulate employment.   High employment pushed by government spending is not good for business in the long term.

These factors and the enormous layers of debt at every level (government, corporate and consumer) makes this current short term bull trend a good time to exit the market and reposition in defensive investment strategies.

There is one more reason why a disaster could be looming. Learn it tomorrow.

Until then, good investing.