No, it’s not the parties for hosting or the marshmallows for toasting or caroling out in the snow. With apologies to Andy Williams, it’s the most wonderful time of the year because the calendar has rolled over to November, heralding the start of historically financial good cheer.
November to April is the seasonally favorable period in which stocks generally have enjoyed terrific performance. Adding to the cheer for 2018, corporate profits have been strong and dividend payouts have been rising. Also, as our newsletter subscribers know, even though interest rates have moved up somewhat and the Federal Reserve appears poised to hike the Federal Funds rate again very soon, a rising rate environment has historically been a favorable backdrop for the kind of undervalued, dividend-paying stocks we have long favored. With the major market averages trading near all-time highs this holiday season, we believe that value stocks will be the most memorable—and hopefully profitable—presents found under the tree.
Some things are true all year. We maintain our focus on the long-term prospects of our broadly diversified portfolios of stocks we believe are undervalued. The only problem with market timing is getting the timing right. But the holiday season continues to intrigue us. Obviously, seasonal factors do not always hold, but the evidence suggests that we have just entered the most favorable six-month stretch. Nearly nine decades of data make a compelling argument!
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