A Good Start Means a Good Year Ahead

It’s not hard to predict the future…

Well, not the distant future. That’s almost impossible to predict. But you can get a good idea of what’s next in the near future.

The best guess is this: Whatever just happened will probably keep on happening.

If it rained five minutes ago, it’s probably still raining. If you sprained your wrist yesterday, it’ll probably still hurt tomorrow.

In the short term, barring specific intervention, that’s how the world tends to work.

That’s why sticking with the trend is such a powerful way to invest. It might sound like common sense… But this knowledge helps you cut through the noise and see where to make good trades.

Right now is a great time to do this. You see, history shows that when stocks rise in January, they tend to keep rising.

And that means we can expect double-digit returns through the end of the year.

To Maximize Profits, We Follow the Trend
I’ve met plenty of investors who think trend investing is like fortune-telling – nothing but superstition. They don’t see a fundamental reason why it should work, so they assume it won’t.

But the data is clear… Trends are a powerful force in the investment world.

One example is looking at what stock returns in the month of January mean for the rest of the year. History shows that if January is positive, stocks tend to keep rising… And we saw a positive return last month. Take a look…

It wasn’t a massive gain. But the S&P 500 Index finished January with a 1.4% gain.

Many investors will ignore that fact. Or they’ll brush it off without a second thought. But history tells us that would be a mistake.

To see why, I looked at 76 years of data. In 46 of those years, stocks rallied in January. Here’s what happened over the next 11 months…

These returns tell us what to expect through year-end based on January’s performance. And the results are impressive…

After a winning January, stocks tend to jump another 11.6% through the end of the year. And they’re positive through year-end 87% of the time.

If January is a loser, the rest of the year tends to disappoint. The typical gain drops to 0.7%, with a win rate of just 60%.

In the stock market, at least in the short term, whatever just happened is usually what’s going to happen next. That’s why trend investing works. And when January is a winner, stocks tend to keep winning.

That model might seem simple… But it’s how we rack up big, safe profits. We’re still bullish, and we’re staying invested in U.S. stocks right now.

Good investing,

Brett Eversole

Source: Daily Wealth