Stock Talk - Summer Loving - Tactical Trading

Starting point is 00:00:00 Investors, a few times a year, I find myself penning a script to a video combating the almost constant dire economic and stock market bubble warnings from the likes of Harry Dent, Robert Kayasaki, retired hedge fund billionaires, and for the last 15 years and counting, Jeremy Grantham. Most of these calls actually come from individuals or services that, first, don't actually manage money. Second, have never managed money. And worst of all, know absolutely nothing about you, your family, in your individual financial situation. My latest video on this topic was released early in the year to combat the annual crash cart callers that come out en masse at the beginning of the year to generate book and newsletter sales.

Starting point is 00:00:43 To date, it's our most viewed investment video on YouTube. I'll drop a link to that video in the description below. Investors, one of the most interesting things I find about this is I've had over 6,000 YouTube views in just six months. This far surpasses our video releases during the second half of October last year when the markets were declining and we were previewing our team's forecast

Starting point is 00:01:04 for a strong fourth quarter of 2023 into the first half of 2024. It's almost three times the viewership we've had of our live stream event that aired on Thursday, October 26th, near the weekend of the market lows late last October where the team both accurately and precisely called for a rally in stocks to begin. No guarantees of a repeat,

Starting point is 00:01:26 but certainly interesting data points. With these things in mind in the summer approaching, I wanted to talk about tactical trading and asset allocation rebalancing. Why? Because it's summer, and we're in the normal summer rally time for stock markets. Believe it or not, overall stock and bond market volatility is quite low at the index level. If you're nervous about the future, this is when you should be talking to your advisor. You shouldn't wait until volatility is trending higher or spiking.

Starting point is 00:01:52 It's usually too late to add value to your portfolio by then. So as frequent viewers of our content know, our team tried to be able to be. to give data in advance of events happening if we see things that have high odds of reoccurring as they have in the past. No guarantees, of course. The future is never exactly like the past. We've discussed the presidential election cycle and historic effect on stocks since the second half of 2022, previewing what our team thought would be tail wins for stocks in year three, that was 2003, and continued tailwinds for stocks in the first half of the fourth year, that being this year, the first half at 2024. Once again, here's Steve Sutton-Meyer's team's great work at Merrill Lynch

Starting point is 00:02:32 on the fourth year of a presidential cycle. These are historic data. In the past, we've shared the monthly return data of the S&P 500. Let's take a look at the median return data again. Then again, instead of monthly return, here's another look at Steve's charts. This chart lays out the three-month rolling holding period return of the S&P 500. This is a table of what the total return investor would earn in its historic odds, say if an investor bought in May and sold at the end of July. This table says that historically 62 and a half percent of the time an investor made positive three-month holding period returns, and their average return was a little over 2 percent between May and July in the fourth year of a presidential cycle.

Starting point is 00:03:13 This is a buy-and-hold three-month average return. That's what this chart is trying to convey. Investors, the three major takeaways from these charts are, first, historically speaking, the fourth year of a presidential election cycle is up overall, with a very positive return, and it doesn't matter if it's a Democrat or Republican president. Second, every three-month holding period X, March through May, has been, on average, positive, with only that three-month window being barely down, a little over 0.03%. And third, and most surprising to many investors, is that that catchy phrase, sell in May and go away,

Starting point is 00:03:51 saying is not, I repeat not, historically a profitable tactical trading strategy in the fourth year of a presidential cycle. In fact, looking at the table, June through August, three-month period has historically been not only the highest three-month period, but also the highest odds of being positive investment returns. Once again, no guarantees, of course. So if you're a retiree or near retiree, still watching this video, you might be asking yourself, if Oak Harvest and their investment team were positive into the October 2003 lows, calling for a strong first half rally in 2024 in stocks, called for a summer rally in stocks as well, and currently still thinks the markets close out in 2024 on a strong note, why would this video be titled Summer 11

Starting point is 00:04:37 Tactical Trading? Because I've now been CIO of Oak Harvest for over six years, and I think I've developed a feeling not only for the financial markets, but also for anticipating many client and retirees and near retirees moods, anxiety levels, risk tolerance, and trigger points in advance of events happening. And with the volatility in markets subdued at low levels and stock returns high for the last 10 years, if over the years you found yourself reacting emotionally in your portfolio when the markets are down or volatility is high, say like Christmas Eve, December, 2018, or COVID, March 2020, or even worse, when the markets were down, years post.com bubble or the great financial crisis, now is the time to talk to your advisor to

Starting point is 00:05:24 walk through your plan well in advance of your anxiety rising, as is likely for many into the October election window, which is usually a weaker return period profile for the stock market. Discuss how much risk is in your allocation plan under downside market scenarios just in case investors, historically, there is a third quarter sell-off in the markets during election years, just as there is almost every other year. And while most of these sell-offs are just cyclical corrections and short-term pullbacks and otherwise long-term bull markets and economic expansions, it's virtually impossible to tell if that sell-off is a mild correction in an economic soft landing or if it's the beginning of something more dire, like 2000 or 2008. Investors,

Starting point is 00:06:11 if you're going to make a reallocation decision to shift money out of stocks and equities, into less volatile assets like bonds, but also assets with lower expected long-term returns, it's best to do it when indexes are up and volatility is low, not the other way around. Over my career, I've found very few people willing to sell less risky assets like bonds to buy higher volatile assets like stocks when the markets were down for an extended period of time,

Starting point is 00:06:40 like quarters or years. However, this is how one should tactically time buying and selling stocks if you're making those moves as your highest percentage returns will come for investing money during recessions, not when the economy is roaring ahead or slowing down like we're having right now. For investors or retirees who've been fearful that the markets might experience a 1970s lost decade or a repeat of the lost decade after the dot-com buildout or who feel anxiety over the upcoming election now is the best time to give O'Carvis a call and set up a meeting. Let's talk. If you're uncomfortable with the wider range of possible equity outcomes,

Starting point is 00:07:19 the Oak Harvest Investment Team has launched a new strategy that retains the ability to go long stocks, short stocks, as well as by partial hedges and shock absorbers for a stock portfolio. Information on this new strategy of ours can be found at oakharvestfunds.com. From the whole team here at Oak Harvest, have a blessed weekend. All content contained with an Oak Harvest podcast expresses the views of the speaker and is for informational purposes only. It is based on information believed to be reliable when created, but any cited data, indicators, statistics, or other sources are not guaranteed.

Starting point is 00:07:55 The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast should be considered as personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment and your investment results may differ when compared to an index. Specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss and past performance is not indicative of future results.

Stock Talk - Summer Loving - Tactical Trading

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