September and October are often difficult for stockholders
September is historically the worst month for stocks and October has provided investors with some of the most historically memorable dates – 1929, 1987, 1998, and 2008. It’s a long list, and none of them are good.
So what’s an investor to do? As longtime clients of Dock Street have already guessed, our answer is: “do nothing”. While these two months are traditionally punishing for investors, they are followed by the most rewarding period – November to April.
Of course there’s plenty to worry about. The UK and France are facing a debt crisis, the independence of the Federal Reserve is in doubt, and there’s always President Trump saying something to rattle markets. So why “do nothing”?
When we look past the headlines to how the companies in our portfolios are performing, we calm down. Profits at all these businesses continue to grow at more than 15% per year, with a number of them growing much faster than that. It’s those growing profits that will drive stock prices over time and getting derailed by seasonal factors or nasty headlines has always been a mistake.
The primary driver of rising profits continues to be the AI revolution. While this leap in technology is disrupting many businesses, on balance it is providing some with remarkable opportunities and will, we believe, increase productivity across the board. Higher productivity provides individuals with new job opportunities, and certain businesses with the ability to do more with less.
A rising tide is the result. Of course not all boats rise equally. It’s our job to find the few that catch the tide best.
Best regards,
Daniel A. Ogden
Dock Street Asset Management, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission. You should not assume that any discussion or information contained in this letter serves as the receipt of, or as a substitute for, personalized investment advice from Dock Street Asset Management, Inc.
It is published solely for informational purposes and is not to be construed as a solicitation nor does it constitute advice, investment or otherwise.
To the extent that a reader has questions regarding the applicability of any specific issue discussed above to their individual situation, they are encouraged to consult with the professional advisor of their choosing.
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Our comments are an expression of opinion. While we believe our statements to be true, they always depend on the reliability of our own credible sources. Past performance is no guarantee of future returns.
