Market Crash? Nah, Just a Seasonal Period...

“The market is crashing!”, “Nvidia is tanking!”, “It’s like 2008 all over again!”. Look while everyone and their grandma is looking to be the next Michael Burry by screaming about an impending crash, let's be real—it’s just the market going through its seasonal mood swings. Think of it like my girlfriends T.O.M.: it gets intense, excruciating even, a few choice words come out (understandably)... but then it mellows out, and before I know it, things are back to normal. 

I’m sure you’ve probably heard the old saying, “Sell in May and go away,” right? It’s like the market's version of hibernation, but for the summer. Investors start panicking, thinking the market’s about to nosedive, when in reality, history tells us otherwise. According to CFRA, the S&P 500 has averaged a 1.6% gain during the summer since 1945. Which in the grand scheme of things is not that bad for a season that gets as bad of a rap as the Detroit Lions franchise… (Apologies to Eminem). 

But beyond that, here’s where it gets interesting. In election years, the S&P 500 doesn’t just do well—it thrives. We’re talking an average gain of 3.7% during the summer. That's more than double the usual summer bump. And let’s face it, with the political drama we’ve got brewing, this year might be one for the books. 

Plus, despite all the doom and gloom predictions, companies have learned to roll with the punches. Higher interest rates? No problem. Solid balance sheets and growing earnings are keeping them afloat. Oil prices? Stable (for now), thanks to OPEC+ playing nice. Sure, inflation is the boogeyman under the bed, but as long as it doesn’t throw us a curveball and spook daddy Powell again… we should be good.

In fact, digging deeper in the numbers shows that when the S&P 500 has had a good first 100 trading days in an election year, the rest of the year tends to be strong. Bank of America strategists pointed out that when this happens, the market is up 93% of the time with a gain of 10.1%. As of now, the S&P 500 is up over 10% since January. So, if history repeats itself, we might be in for a good ole fashion yeehaw going into 2025. 

With that said though, as we inch closer to the November election, expect some turbulence. September is historically the worst month for stocks, and with election uncertainty, it could be a wild ride. But hey, market volatility isn’t necessarily a bad thing. It’s like watching a reality TV show—chaotic but entertaining, and sometimes you get a happy ending (from the show - not a Netflix and Chill happy ending. C’mon man!). 

Source: Soundboard

Now of course, trying to time the market based on elections is like trying to guess what Elon Musk will tweet next. It’s a losing game. Historical evidence shows that staying invested is the way to go. Companies will keep innovating, and the market will keep chugging along, regardless of who’s in the Oval Office.

But the thing is, we as humans are emotional, and people love to panic about how the market will react to a new president. Will the world end if Biden gets another term? Will Trump’s return send us back to the Stone Age? Probably not. Historical data shows no clear pattern favoring either political party. The market’s performance is influenced by a myriad of factors beyond just who’s sitting in the big chair.

So as your annoying work buddy goes on and on about why you’re an idiot for may or may not having money in the market… deep down he knows the market has a knack for bouncing back. He just doesn’t have the stomach to ride with it. 

Source: IMDb

Companies adapt, innovate, and continue to seek profits. Amazon isn’t going to stop delivering packages, and groceries will still fill the shelves. The resilience of businesses ensures that the market grows in the long term, despite short-term hiccups.

So, what’s the game plan? It’s just that time of the year for the market. We’ve had an explosive week in fantasy land so it’s time to take a break and come back to some form of reality. 

As for specific stocks like Nvidia, sure it’s carrying the load of the propped up market but who knows what their next earnings will bring come August. They’ve just blown away estimates recently, and they might do it again igniting an even more explosive boom towards the end of the year. But remember, the market’s a long game. So it’s important not to get caught up in the daily drama. 

In the end, the market’s summertime blues are just a phase. Like the emo phase your sibling had in highschool, it’ll pass. History suggests that bigger gains could be on the horizon, especially in an election year. So, take a deep breath, maybe sip on a cold Friday afternoon beer, and if next week proves to be a valid case of a summertime bloodbath, then just remember: this too shall pass my friend. 

Stocks.News does hold positions in Amazon as mentioned in the article.