The stock market continues to power higher, with the S&P 500 up about 7% year-to-date in 2014 after a massive 30% up year in 2013.
However, recent softness — including a big drop at the end of September — has some investors worried about a stock market crash.
So will stocks crash soon? Or is all this bubble talk just a lot of hysterics?
There Is No Stock Market Bubble …
I recently penned a column about why this can’t be a stock market bubble, highlighting the following reasons:
- Economic data is good
- Many investors are skeptical, not exuberant
- Valuations are fair
- Fed tightening won’t kill the rally
- A rainy day is not doomsday
I don’t dispute that we could see a rocky patch in the next few months, but I hardly think that signals a stock market crash that is significant or long-lasting.
… So Ignore the ‘September Swoon’
Louis Navellier, editor of Blue Chip Growth, thinks much the same way. In a recent note to clients, Navellier wrote, “The same thing happened last year. As I have been saying for some time, September 30th is historically the best day to buy during mid-term election years.”
Here are the details:
“The basic data comes from a Bespoke Investment Group (BIG) study published on August 4, 2014. BIG showed that, since 1945, mid-term election years averaged a net decline during the first nine months of the year. However, the market tended to rise strongly in the fourth quarter of mid-term election years. The first three quarters of mid-term election years averaged a 2.3% loss vs. a 7.7% gain in the final quarter.”
In other words, don’t fret a stock market crash. The softness is September is actually your biggest buying opportunity — so lock and load.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.