As a blogger, I read a lot of blogs. One of the better blogs I read is www.crossingwallstreet.com, written by Eddie Elfenbein. He is a self proclaimed lover of the stock market because it is one of the greatest inventions of all time. In either case, every other week or so he posts a “stat of the day”. This week’s stat of the day piqued my interest because it was simply unbelievable; the first day of each month since January 1, 2000 has outperformed the market 15 fold.
Pretty remarkable, right? Well, take a look at the chart below. The blue line represents the first day of the month since 2000, and the black line represents the S&P 500 (including the first day of the month). During the entire decade, the first day of the month has been up 33%, while the S&P 500 is only up 2.52% respectively. Granted, the market did take almost a 50% tumble from 2000-2003, but we have recovered since then to new record highs.
I guess instead of being a long term investor utilizing the “buy and hold” strategy, I should work one day a month (the first of the month) and just buy futures in the S&P and watch my strategy continue to profit. It’s been successful for the past seven years, right? The mantra has always been “the trend is your friend” and indeed the first of the month has been a life saver for the overall market performance.