History-minded investors know that September is long been considered a tough one for stocks.
Here’s why: September has delivered negative returns over the last 100 years on the Dow Jones Industrial Average. It’s the only negative calendar month that has done so, in fact.
If your time horizon is short and your retirement is near, this is a data point well worth considering right now. The S&P 500 is hovering close to all-time record territory. The Dow and the Nasdaq are within 2% of their all-time highs.
Now analysts are warning that we are right around the corner from a seasonal market period that has seen increased market volatility in recent years. It starts on October 5.
It’s called a “blackout period.” A time when America’s companies can’t rebuy their shares because they are on the verge of releasing quarterly results.
Unfortunately for the markets, this quarter’s blackout period arrives at a particularly critical moment, say analysts at ClearBridge Investments. ClearBridge manages over $140 billion in assets.
“Buybacks provide a tremendous amount of support to the market, and with blackout season coming, we won’t have that added measure of support,” says ClearBridge research.
Consider that 86% of the companies in the S&P 500 will be in a blackout starting October 5th.
Goldman Sachs has also been watching the blackout effect. The investment bank recently said that blackouts “likely intensified the decline” in stocks when they sold off in early February. Both the Dow and the S&P 500 dropped 10% in their corrections at the time.
That’s why Scott Glasser, co-chief investment officer of ClearBridge, spoke out at last week’s Legg Mason Investment Forum.
He said stocks are “overdue for a correction.” In his view, blackout periods have a poor track record: “volatility has been nearly 1 point higher during blackout periods than when a majority of firms are free to repurchase stock.”
This could come as a sudden and unfamiliar experience to today’s investors. Many of them haven’t seen a serious market decline in over 10 years!
Markets move for many reasons. Many of these reasons are hard for individuals to decipher and forecast. Even professionals get it wrong, and we have no crystal ball here.
That’s why it pays to consider an all-season strategy.
History speaks so powerfully for gold and silver. Especially when you are thinking about the security of your retirement. Gold and silver are critical to consider at times like these.
These precious metals have a proven safe haven value and allow for portfolio diversification. Professional investors have long reminded us that the markets have a predictable long term pattern… and that means an inevitable swing down at some point.
GOLD AT $1350, SILVER AT $17.50 BY END OF 2019, SAYS CAPITAL ECONOMICS
Commodity analysts at Capital Economics say that both silver and gold could see higher prices through 2019.
Their research models are calling for gold to be around $1,350/oz and silver at around $17.50/oz by the end of next year.
The UK-based investment company says silver will be supported by three factors: improving demand for industrial metals like silver, improvement in investor sentiment and dwindling supply.
“The pace of supply growth is set to slow appreciably next year, partly due to a lack of new mines and expansions that are set to come on stream,” says their research.
Capital Economics believes that when the Federal Reserve is forced to end its recent rate hike cycle, that will support precious metals.
“COLLAPSE WILL SWEEP AROUND THE GLOBE,” SAYS MOULD
Russ Mould, investment director for AJ Bell, says that economic conditions are the mirror image of America just before the 2008 crash.
His recent calculations show that median U.S. income is now back to 2007 levels, in sharp contrast to U.S. household net worth, which is already 50% higher than the previous peak 10 years ago.
Mould warns that this pace of household net worth vs. incomes isn’t sustainable. He thinks the Federal Reserve is to blame for inflating all kinds of assets to unsustainable levels that could soon come crashing to earth.
“This is one warning that at some stage another collapse in financial markets will sweep around the globe,” his report says.
Overstretched investors will feel this impact first, he believes.
“Because of higher borrowings, and higher exposure of households to financial markets for their wealth, the impact of any interest rate hikes and drop in securities’ valuations could be magnified,” writes Mould.
TIME TO CONSIDER YOUR EXPOSURE TO RISK
Every retiree has to provide for their family over decades with the assets they’ve set aside during their working years.
It is a huge burden for anyone to carry, but somehow America’s hard-working families get it done.
One way this happens is with old-fashioned, common sense diversification.
Traditionally, gold and silver have been regarded as safe haven assets that reduce overall volatility in a portfolio over time. When your retirement is at risk, the quality of your sleep at night could be seriously affected if market volatility gets too high.
In a world of uncertainty, you should think about what endures. Why no paper currency has ever lasted 10% as long as gold and silver, which have been precious units of trade for thousands of years.
Some choose to add physical gold and silver to their home safe or a nearby safe deposit box. Others prefer a Gold IRA, which allows them to hold safe-haven assets right alongside other traditional investments in a single tax-deferred account.
Which will you choose? We would be happy to answer your questions and help make a decision.