February 1st, 2011

February in the History Books

It’s been a while I know so it’s time to get back to the discipline of writing this blog …. I know all of you out there have been patiently looking for some current insights as to where this market might be going. To all of you thanks for coming back. I know I could try to come up with some excuses like the fact that I’ve been focusing on my subscribers and the subscription service.

The truth is that after more than 600 posts, I just got burned out and needed to take a break to recharge. While the Middle East looks like it’s going through some upheaval, when it comes to the market not much has been happening other than stocks continue to trudge ever higher. If you’ve been in the right stocks, this has been a glorious and wonderful 5-month stretch.

But with February beginning tomorrow the question is how the month has fared historically? You need to look no further because I have the answer:

Only September and February have, on average, shown declines; the other ten months have all shown average increase over the past 70 years.

Before we head for the shelters I should point out the three Februaries account for these bad results:

  • 2009 (Financial Crises Crash): -10.99%
  • 2001 (Tech Bubble Crash): -9.23%
  • 1982 (Recession): -6.05%

If you exclude these three, the market would have just nudged into the positive column with an average 0.06% gain. Eliminating a few months would not have changed the results since more than half (38) Septembers over the past 70 years produced negative returns, eleven of which were more than -5% (compared to 35 negative and only 4 greater than -5% for February).

February has a bad reputation in the history books but you should worry only if you believe the economic environment today matches that of the past two Crashes and the last big recession before the one we’re in the process of now climbing out of.

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  • Denali92

    in my experience February tends to be a month that is characterized by potential ends of trends early and late in the month and a continuation in the middle of the month.

    Essentially, early February sets the tone for the month and the market generally follows that trend till the end of the month or later….

    I guess that is probably because January and March tend to be inflection points for the market.

    I think 2007 was the only time that February saw a significant top in the market and that only lasted a few weeks – oddly enough it was China – an emerging market that was blamed for that sell off.

    THANKS for the post! I always enjoy reading them, though I can certainly understand the challenge of blogging regularly!