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August not necessarily the best month for stocks, then again...

By Dian Vujovich

I happen to really enjoy Gary Alexander’s columns about history and the stock market. He writes them for Louie Navellier’s company and the most recent is about how stocks have historically performed during the month of August.

The column falls right in line with an Alfred Tennyson quote I read early this morning: “Knowledge comes, but wisdom lingers.”

The way I see it, one can gain a lot of wisdom by looking back and learning from the knowledge history provides—-particularly when it comes to Wall Street and one’s anticipated financial expectations.

On that score, here are a few tidbits from Alexander’s column:

• August used to be the best month of the year for the stock market. Of course, that was between 1901-1950 when America was an agrarian country and most people lived on farms, and, before WW II.

• Since 1987, August has been the second-worst performing month for the Dow and the S&P 500. Every few years its fall gets real ugly as it did in 1990 with Saddam Hussein’s invasion of Kuwait when stocks fell 10 percent on August 2. Another ugly was in 1998 during the hedge fund crisis when stocks collapsed 15 percent during that month.

• Then again, since 2000, the markets have gained ground 7 out of 10 years during this month. Between 2003-09, August has been a positive month in six of those past seven years.

•If you use August as the starting point of Hurricane Season, (Alexander is defining it as August through October), the market rose in three of the last five years during that season.

So what’s all of this have to do with today? Not much really, other than to remind investors that when it comes to calling the direction of stocks on Wall Street in one month— or for one year or a dozen years— history shows that nobody knows what the future will bring. Now that’s something everyone would be wise to remember.

Alexander’s column is at: http://www.navellier.com/blogs/entry.aspx?ID=145.

To read more articles, please visit the column archive.

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