Visiting Dallas this Week
As the market continues to correct its 20% October rally I'll be driving up from Houston to Dallas, TX. I had a great time last night at the new Houston Texans Grille party. It is set to open today November 22, but I was invited to a pre-opening party yesterday by a long-time client of mine. This place is off the charts. Very cool spot. If you're ever in the area, definitely go check it out.
Going to get my BBQ on with a another customer of mine tonight in Fort Worth. If you live near the Dallas area, please don't hesitate to send me a note.
In the meantime, here is Sam Stovall's take on the current status of the markets via Marketwatch:
"You might not know it from Wall Street’s steep decline Monday, but the period from Oct. 31 to April 30 tends to be the most favorable for U.S. equities, according to numbers cruncher Sam Stovall, also chief equity strategist at S&P Capital IQ.
Going back to World War II, the S&P 500 $SPX gained an average of 6.8% in the latter half of the year, as opposed to a 1.2% average gain from May through October.
And, assuming Oct. 3 was indeed the low for this correction, there have been eight other times since World War II that the market either went through a severe correction or a mild bear market.
Using those eight down times as a guide, the S&P was up an average 13.5% three months out, 23% higher six months later, and 32% higher 12 months later.
In every observation, the six-months-later index was priced higher than at month three. In all but one observation, the 12-month index was higher than at six months out, Stovall says.
And Stovall believes the S&P won’t fall below its Oct. 3 low, which at 1,099 had the index priced at 11.3 times operating earnings, or a 37% discount to the median PE [price-earnings] since 1988. By another measure, the 12.5 multiple based on GAAP (Generally Accepted Accounting Principles) had the S&P priced at a 42% discount to the median PE since 1988, and a 20% discount to the median since 1936.
As a result, “valuations look for long-term investors to be fairly attractive, in our opinion,” Stovall said.
Source:
Time to Buy Stocks? History Says Yes (MarketWatch)