While investors should never let rules of thumb override financial fundamentals, there are times when the fundamentals can become quite hazy. In fact, recent inflation figures and other high-frequency indicators suggest that we are in such a period right now.
LONDON – During my lengthy career in finance, I picked up several market heuristics that have generally proven more useful than not. Every January, for example, I remember the “five-day rule,” which holds that if the S&P 500’s accumulated performance is positive over the first five days of the new year, there is around an 80% probability that the overall market will end the year higher than where it started. So far, this analytical trick has worked pretty well, despite all of the world’s uncertainties.
LONDON – During my lengthy career in finance, I picked up several market heuristics that have generally proven more useful than not. Every January, for example, I remember the “five-day rule,” which holds that if the S&P 500’s accumulated performance is positive over the first five days of the new year, there is around an 80% probability that the overall market will end the year higher than where it started. So far, this analytical trick has worked pretty well, despite all of the world’s uncertainties.