What is Market History Telling Us?

Here's an interesting study from Bespoke Investment Group. They went back to 1928 looking for the six-month period where the stock market most closely resembled the six months we've just been through. Then they looked to see what the future held from that point.

See their study and charts here.

Particularly noteworthy is the way that 1959/60 period lined up with both a prior recession and a new "double dip" recession just ahead. That's very similar to the scenario today (no surprise that the stock market responded in similar fashion, I suppose).

As the study points out, it's also very interesting to note that while April 1960 did indeed bring about a dreaded "double dip" recession, the stock market didn't really suffer much from it, declining just 6% from the point we're at now to its ultimate low. And following that second recession, the market was ready to leap higher.

Of course, none of this means anything concrete for the future we face today. But it's interesting to see all these similarities lined up and then realize that the bad outcome for the economy that many are fearing today didn't impact the stock market in that prior period the way most are assuming it would today. (And, of course, we may not even get that double dip recession this time around — the jury is still out.)

It's also interesting to me that in that 1960 example, the pivot point occurred right around the end of October. The seasonality and election cycle influences seem too obvious to ignore, but perhaps I'm reading to much into it. Given our own proximity to the seasonality and election cycle pivot point, that would seem to be encouraging.
____________________________________________________________________________________

Mark Biller is Sound Mind Investing's Executive Editor. Learn more about Christian investing and finances at the Sound Mind Investing website.