Sunday, August 10, 2003

A month to test investor nerves

By William Hanley

The dog days of summer stretch into September

Mark Twain, who lost his shirt in the stock market but managed to keep his wicked wit despite some serious margin calls on his sanity, once remarked that October "is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August, and February."

In fact, October, the month of the crashes of 1929 and 1987 and other dramatic setbacks for investors, is not the worse month historically. That dubious distinction goes to September, followed by August.

So, here we are in deepest, darkest dog days of summer, when on a seasonal basis equities are supposed to fare the worst, when history suggests that vacations may play a part in sending markets lower -- a trend that has persisted even in an era when telecommunications and computers can keep investors in close touch. (We can only wonder at the merry mockery Mark Twain, who once famously declared that a gold mine was a hole in the ground with a liar on top, might have made of the dot-com era.)

It has not yet proved prudent to have followed the market wisdom to "sell in May and go away" and the S&P 500 index is still up 23% from the March lows.

The market, however, has been basically stuck in the doldrums since the summer solstice on June 21. The S&P is off three percentage points and the technology-heavy Nasdaq composite is up only a couple of points.

... Is it time to take something off the table, to lock in the profits from the market's great spring rally? Or are the economic and earnings signals strong enough to warrant staying the course and perhaps buying even more equities? >>Full story...

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