Episode 404: If You Understand Market History, You Are Bound to Profit From It
On this week's Stansberry Investor Hour, Dan and Corey welcome Jeffrey Hirsch to the show. Jeffrey is the editor-in-chief of the Stock Trader's Almanac – a book that has been published annually since 1967 and that analyzes stock trends, patterns, and cycles. He is also the editor of the Almanac Investor newsletter, which releases monthly and provides strategic investment advice.
Jeffrey kicks off the show by describing how he got his start interpreting data and how he eventually ended up working on the Almanac. That leads to a discussion about what has changed in the Almanac over the decades versus what has stayed the same – in terms of both human behavior and content. Jeffrey also talks about President Donald Trump shaking things up, what has happened historically in postelection years, and where he believes the market could go from here...
I'm not convinced that we're going worst-case [scenario] right now. We're still looking at that election gap on a technical basis that we're testing right now.
Next, Jeffrey reviews the basics of risk control that all the best investors follow and which fundamentals his team looks at to evaluate stocks. He also explains what traders usually get wrong about the moving average convergence divergence ("MACD") indicator and the Santa Claus rally. Moving to the topic of seasonality, Jeffrey explores the flaws in the traditional "sell in May and go away" adage, what the "Christmas in July" phenomenon is, and how market patterns changed after 1949. He notes...
[The] one-year seasonal pattern from 1901 to 1949 versus 1949 forward... it's like the reverse [of "sell in May"]. It's like, buy in May. Because it was a whole different economy driven by farming and agriculture. All the money was flowing into the economy with the buying of fertilizer and seed and hiring people... And then [the market] sort of peaks at harvest time in late September. That flips [after 1949] with the military industrial complex.
Finally, Jeffrey discusses what led his father, Yale Hirsch, to originally publish the Almanac and how a background in music can help investors recognize historical cycles and patterns. He then finishes with his opinion on 5,700 being an important level for the S&P 500 Index and gives tips on how you can fight against confirmation bias...
Whether it's risk controls, stops, or whatever it is, you've got to ask yourself... "What happens if I'm wrong?"
Click here or on the image below to watch the video interview with Jeffrey right now. For the full audio episode, click here.
(Additional past episodes are located here.)
The transcript is coming soon.
This Week's Guest
Jeffrey Hirsch is editor-in-chief of the Stock Trader's Almanac, editor of the Almanac Investor newsletter, president of the Hirsch Organization, and CEO of Hirsch Holdings. He's also an author, having published The Little Book of Stock Market Cycles and Super Boom: Why the Dow Jones Will Hit 38,820 and How You Can Profit From It. Jeffrey got his start in finance in 1990 as a market analyst and historian. Since then, he has appeared on CNBC, Bloomberg, CNN, and Fox Business, among others.