Summer Loving – Tactical Trading

Once or twice a year I find myself penning a script to a video, combating the almost constant dire economic and stock market bubble warnings from the likes of Harry Dent, Rober Kiyosaki, retired hedge fund billionaires, and for the last 15 years and counting, Jeremy Grantham.  Most of these calls actually come from individuals or services that 1- do not actually manage money, 2- never have managed money, and worst of all 3- know absolutely nothing about you, your family, and your individual financial situation.  My latest video on this topic was released early in the year to combat the annual crash cart callers that are out en mass at the beginning of the year to generate book and newsletter sales I think. To date, it is our most viewed investment video on YouTube.  Here is the link to that video.

One of the interesting things about it, is its had over 6000 views on YouTube in barely 6 months. This far surpasses our video releases during the 2h October last year when the market was declining, and we were previewing our teams forecast for a strong 4q23-1h24.  It is also almost 3x the viewership we have had for our livestream event Thursday Oct 26th, near the weekend of the market lows last late October 2023, where our team both accurately and precisely called for the rally in stocks to begin.  No guarantees of a repeat, but certainly interesting data points.

With these things in mind, I wanted to talk about tactical trading and asset allocation rebalancing.  Why?  Because It’s summer and we are in the normal summer rally time for the stock markets.  Believe it or not, overall stock and bond volatility is quite low at the index level.  If you are nervous about the future, this is when you should be talking to your advisor.  You should not wait until volatility is trending higher or spiking, it’s usually too late to add value to your portfolio then.

Our team tries to give data in advance of events happening if we see things that have high odds of reoccurring as they have in the past.  No guarantees of course, the future is never exactly like the past. We’ve discussed the Presidential election cycle and its historic effect on stocks since 2h2022, previewing what our team thought would be tailwinds for stocks in year 3, that was 2023, and continued tailwinds for stocks in the first half of year four, that being the first half of this year, 2024.  Once again, here is Steve Suttmeier’s teams’ great data work at Merrill Lynch on the 4th year of the cycle, historically.

In the past, we‘ve shared the monthly return data of the S&P500.  Here is that median return data is again:

S&P 500 Presidential Cycle Year 4 Monthly Median Returns: 1928 to present. Source: Bloomberg

Instead of monthly returns, here is another of Steve’s charts.  This chart lays out the 3-month rolling holding period returns of the SP500.

3-month rolling holding period returns of the SP500

This is a table on what total return would an investor earn, and its historic odds, say if an investor bought in May and sold the end of July.  This table says that historically, 62.5% of the time, an investor made a positive 3-month holding period return and their average return was 2.03%, between May and July in the 4th year of a Presidential cycle. This is a buy and hold 3-month average return.  That’s what this chart conveys.

The 3 major take aways from these charts are 1- historically speaking, the 4th year of a Presidential election cycle is up overall, with a very positive return. Doesn’t matter if it’s a Democrat or Republican president. Second, every 3-month holding period ex March through May has been, on average, positive with only that 3-month window being barely down -.03%. And third, and most surprising to many investors is that the catchy “sell in May and go away” saying is NOT, I repeat not, a profitable investment tactical trading strategy in the 4th year of a cycle. In fact, looking at the table, the June through August 3 month period has historically been not only the highest 3-month return period, but also has the highest odds of being a positive investment return.  No guarantees of course.

So, if you’re a retiree or near retirees still watching this video, you might be asking yourself, if Oak Harvest and their investment team was positive into the October 2023 lows, called for a strong 1h 24 rally in stocks, called for a summer rally in stocks, and currently still thinks the markets close out 2024 on a strong note, why would this video be titled “summer Lovin: tactical trading”?  Because, having now been CIO at OHFG over 6 years, I think I’ve developed a feeling not only for the financial markets but also for anticipating many clients, and retiree and near retirees’ mood, anxiety level, risk tolerance and trigger points in advance of the events happening.

And with volatility in the markets subdued at low levels, and stock returns high for the last 10+years, if over the years you have found yourself reacting emotionally in your portfolio when the markets are down or volatility is high, like into Xmas eve December 2018, or Covid March 2020, or worse yet when markets were down for years post bubble or GFC, now is the time to talk to your advisor to walk through your plan.  Well in advance of anxiety rising as is likely for many into the October election window which is usually a weaker return period profile for the indexes.

Discuss how much risk is in your allocation plan under downside market scenarios just in case.  Investors, historically there is a 3rd quarter selloff in the markets during election years, just as there is in most every other year.  And while most of these selloffs are just cyclical corrections and short-term pullbacks in otherwise long term bull markets and economic expansions, it is virtually impossible to tell if that selloff is a mild correction in an economic soft landing, or if it’s the beginning of something more dire like it was in 2000 and 2008.

Investors, if you are going to make reallocation decisions to shift money out of stocks and equities into less volatile assets, but also assets with lower expected long term returns, its best to do it when indexes are up, and volatility is low. Not the other way around.  Over my career, I have found very few people who were willing to sell less risky assets like bonds to buy higher volatility assets like stocks when the markets were down for extended periods of time measured in quarters or years.  However, this is how one should “tactically time” buying and selling stocks if one is making those moves as your highest % returns will come investing money during recessions, not when the economy is roaring ahead or slowing down.

For investors or retirees who have been fearful that the markets might experience a 1970’s lost decade, a repeat of the lost decade after the buildout, or who feel anxiety over the coming election, now is the best time to give Oak Harvest. Set up a meeting.  Let’s talk.

If you are uncomfortable with wider range of possible equity outcomes, the Oak Harvest team has launched a new strategy that retains the ability to go long stocks, short stocks, as well as buy partial hedges and shock absorber “insurance” for a stock portfolio.  Information on this exciting new strategy of ours can be found at

Viewers, for those of you who made it this far, I want to give a shout out to the entire OHFG team as last week, USA TODAY, ranked us as one of the Best Financial Advisory Firms 2024. The award is given to top registered investment advisory (RIA) firms in the United States based on two key criteria:

  • Recommendations from individuals from among 25,000 financial advisors, clients, and industry experts
  • Growth in Assets under Management (AUM) over 12 months and 5-years, respectively

I personally am looking forward to helping us move up this list over the coming years by taking care of our current and future client base. From the whole team here, thank you and have a great weekend.

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