S&P 500 up 6% in November and 12% in 2016

Greetings Friends,

November came in like a lamb and went out like a lion.

On November 4 the S&P 500 logged its ninth consecutive losing day. That was the index’s worst losing streak since December of 1980 – 36 years ago!

Thankfully, the second half of November was a different story.

Since the election, the S&P 500 has gained more than 6% – giving the index a 10% price gain on the year.

That’s not including the S&P 500’s 2% dividend yield. When factoring in dividends, the S&P 500 is up 12% and on pace for a total return between 10% and 14% in 2016.

spy 12-4-16

This quick reversal in the S&P 500 after the election provides an important lesson in investing.

Its a bad idea to try and time the market – that means pull your cash in and out of stocks to try and avoid short-term weakness or a pullback.

The mainstream media worked very hard to scare regular investors into selling their stocks ahead of the election. I saw all kinds of crazy predictions that the S&P 500 would crash regardless which candidate won.

For example, here is a 24 second clip of Mark Cuban being 100%, totally wrong about the stock market’s reaction to the election.

Mark Cuban: I have no doubt the market will tank if Trump wins.

(This is not an endorsement of Donald Trump. As I said last week, I believe stocks have rallied because investors are happy the election is over, not because they favored one candidate over the other.)

The truth is – nobody knows how stocks will perform in the short run – including me.

What I do know is that despite even the most intense volatility, stocks spend a heck of a lot more time going up than going down and have never failed to recover from any weakness. That has been proven time and time again.

And that’s exactly what just happened.

Anyone who shifted into cash or bonds missed out on quick and easy gains – and more than 60% of the S&P 500’s annual return in 2016.

Now, they face a tough decision. Do they buy the all time high or risk the S&P 500 moving higher without them?

Fortunately, this is not a problem me and my clients are having.

I advised my clients to ignore pessimistic headlines, hold steady on their stocks and focus on the big picture.

That turned out to be a good call and we are being rewarded for our patience and discipline.

North American Marijuana Index up more than 200% in 2016

The strong S&P 500 is giving investors a nice boost. However, most of my clients did their portfolios a big favor by investing in marijuana stocks.

The sector has had an incredible year.

The MJIC North American Marijuana Stock Index is up more than 200% this year. Take a look below.

mjic index 12-4-16

Despite those gains, there is still plenty of time to profit. The legal marijuana industry is still in its early stages.

Looking forward, the next big event is January 1. That’s when a number of states are scheduled to kick off their freshly minted marijuana programs. That includes Nevada, one of the largest marijuana markets in the country.

Between the strong S&P 500 and huge gains in marijuana stocks – my clients are having an incredible year.

Congratulations. I’m looking forward to plenty more this December and in 2017.

I will be contacting each of my clients individually to discuss.

In the meantime, please feel free to contact me any time with questions.

That’s all for now. I’ll be back in a few weeks with a holiday update that will include a 2016 re cap and my outlook for 2017.

Your Investment Partner,

Mike

ABOUT THE AUTHOR

Michael Vodicka

Michael Vodicka is the president and founder of the Vodicka Group Inc., a licensed investment advisor (Series 65) and a financial journalist.