I like to look at statistics in order to gain a level of comfort. Like when the Dallas Mavericks went to Miami with a 2-0 lead in 2006 ... the NBA championship was a lock ... which is why I was nervous all the way into the last game of the Finals in 2011.
Since 1928 and 1950, the Dow and S&P 500, respectively, have historically performed well in the fourth quarter, the Dow being up 71% of the time and the S&P 500 up 79% of the time.
Dow Jones Industrial Average, 1928-2010
S&P 500, 1950-2010
Both graphs generated from Yahoo!finance historical price data
So what has happened along the way? We are roughly half-way through the fourth quarter. The Dow is up 10.8% from September 30 and the S&P 500 up 11.2% from the same date. What has occurred historically in the fourth quarter when the Dow and S&P 500 are up at this point?
For the Dow, when up half-way through the fourth quarter, 71% of the time it continues up to the end of the year, with an average increase of 1.4% from this point. When it has declined, the average decrease is -0.6%.
For the S&P 500, when up half-way through the fourth quarter, 75% of the time it continues up to the end of the year, with an average increase of 1.6% from this point. When it has declined, the average decrease is -0.3%.
So, I guess statistics can be somewhat comforting, until they're not. So based on this logic, the Dallas Mavericks will repeat as NBA champions because they have not lost a game so far this season. Oh, but wait a minute ...
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I have long puts on SPY