How You Should Handle the "Summer Slump" in Stocks
Banyan Nation,
Prior to this morning’s opening bell, the stock market was on track to close out one of its worst weeks all year…
But during this morning's trading, the Dow Jones Industrial average ripped 650 points higher, followed closely behind by the S&P 500 and the Nasdaq showing similarly strong openings.
Investors were ecstatic to see shares bounce back, but Goldman Sachs is still urging caution.
In Goldman’s Friday note to clients, the firm warned of a “risk of a setback in the summer” because they don’t see much room for “equity valuation expansion from here.”
Indeed, stocks have been running hot all year long.
The S&P 500 is currently showing a 15% gain from the first half of the year, effectively tripling the historical average annual return of 10%.
Does that mean you should be selling shares and taking some of your profits off the table?
“We do see the volatility in July as a harbinger of a broad market crash,” explains Money & Markets’ Adam O’Dell, “but it’s more important to understand what’s happening within the index right now…
“After this month’s CPI report revealed cooling inflation, investors are rotating out of the largest stocks in the S&P 500 … and into the smaller stocks. Since the July 10 close, the largest 250 stocks in the index are only up 1.6%. But the smaller half has gained 4.5%, more than twice the return.”
Adam believes this trend will continue and deepen through the rest of 2024 — with small-cap growth emerging as the year’s hottest new investment.
Adam’s new Wealth Multiplier system is built to cash in on this massive small-cap momentum. And so far, the results speak for themselves. See for yourself HERE.
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Until next time,
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