Why It's Different This Time- Folks have a real option of taking 5% in bonds or Munis.
So these next set of numbers that shows a possible 5%-6% from here till the end of the year that can be tricky- if enough folks leave to buy bonds...
Notwithstanding the short-term weakness, July is nearly in the books and is set for a fifth straight month of gains in both the Nasdaq Composite (
^IXIC) and the S&P 500 (
^GSPC).
In addition to being up six out of the seven months this year, returns are unusually high — 34% for the Nasdaq and 18% for the S&P 500.
Filtering for these variables reveals an incredibly bullish tailwind for the US benchmark equities index.
Looking at the six prior times the S&P 500 was up five straight months in July, the return for the balance of the year was 8% on average with a 100% win rate.
Broadening out the analysis to include only those years when the January-through-July returns were 10% or more yields a more robust sample size of 21 instances going back to 1960.
These years return on average 4.8% from August to December with 95% of the results positive. (The only negative return was 1987, famous for its
Black Monday crash in October.)
Stocks Up 10% or More Through July
Looking at big starts for the Nasdaq reveals a similar story, but a bit less bullish.
In 26 years going back to 1971, when returns were more than 10% by the end of July, the average return into year-end was 6.3% with positive results nearly 70% of the time.