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S&P 500 : In The Second Half Of Year

Jul. 11, 2013 1:38 AM ET
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TritonX's Blog
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Seeking Alpha Analyst Since 2013

Equity Investor, focusing on large caps with a technical approach.

Most of us know that Equities tend to do well in the Second Half of the Year. For the past few years we have seen that the year's biggest correction tends to come in the summer. After that correction, equities generally get its groove back and rally for the rest of the year which even goes on well into the next year.

So, what should we be expecting for 2013. With all kinds of blow up news coming from Europe yet again and Fed's tapering hints have started making people holding on to equities uncomfortable. By the end of the first half of the year S&P 500 was sitting on just under 10% of gains, which is quite a decent performance when you compare it against some of the other asset classes especially Emerging Markets and Commodities.

I have performed a quick check on the years (since 1950) for which S&P 500 has been a decent performer during the First Half of the Year. My definition of this decent performance has been "up for 5% to 15%".


As one can see, if the S&P 500 is up anywhere between 5% to 15% in first half, the second half 19 out of 20 times gives a positive return! With 95% probability this definitely makes a credible story. The Mean and Median both shows around 8% of gains in the latter half year.

The only time this didn't work out for investors was in 2007 when S&P 500 made a multi-year High. Interestingly even in that year the loss was quite minimal.

In my opinion, this study with however we want to treat history, shows that if the year maintains its footing for first half of the year, more often than not you should expect a similar show from the Benchmark.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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