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. Despite concerns about inflation and rate cuts, 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 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 does appear to be some truth to that. The data shows that the index 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, it’s important to consider the historical trends when making investment decisions. Looking at the past five years, there have been mixed results during the May to October period, with some years seeing gains and others experiencing losses.
Despite the potential for a market slowdown, buying and holding is still considered the ideal strategy for long-term investors. Diversifying your portfolio and considering investments in ETFs like the Vanguard Growth ETF can help reduce risk while still providing exposure to growth stocks.
In the long run, the stock market is likely to recover from any downturns, making it important for investors to stay invested and not react to short-term volatility. While historical trends can provide some insight, it’s essential to focus on the bigger picture and remain committed to your investment strategy.
For those considering investing in Vanguard Index Funds – Vanguard Growth ETF, it’s important to do thorough research and consider all factors before making a decision. The Motley Fool Stock Advisor analyst team has identified what they believe are the 10 best stocks for investors to buy now, so it’s worth exploring all options before making any investment choices.
