The S&P 500 has been on a tear to start 2024, with the broad index already up around 10% in the first three months of the year, hitting record levels along the way. Despite concerns about inflation and the Fed’s rate cut expectations, the market remains red hot. But could a cooling-off period be on the horizon?
Historical data suggests that there may be some seasonality in the stock market, with the S&P 500 generally performing better in the earlier and latter parts of the year. One popular saying on Wall Street is “sell in May and go away,” and looking at the average returns over the past 50 years, there may be some truth to it. The data shows that the S&P 500 has generated higher average returns in the months before and after May compared to the period from May to October.
While timing the market can be risky, investors may want to consider the historical trends when making investment decisions. However, it’s important to note that past performance is not indicative of future results, and there are risks associated with trying to time the market.
Instead of trying to predict market movements, a more prudent strategy may be to focus on buying and holding investments for the long term. Diversifying your portfolio and considering investments in exchange-traded funds (ETFs) like the Vanguard Growth ETF can help reduce risk while still providing exposure to growth stocks.
For long-term investors, staying invested in the market is often the best strategy. While short-term volatility may lead to fluctuations in stock prices, history shows that the market tends to recover over time. By remaining invested and focusing on a diversified portfolio, investors can weather market downturns and potentially benefit from long-term growth.
Ultimately, the decision to invest in specific funds like the Vanguard Growth ETF should be based on individual financial goals and risk tolerance. Consulting with a financial advisor can help investors make informed decisions about their investment strategies.
