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Here's a brief, somewhat disturbing stock market history lesson
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So far this year, stocks are about flat.
And while markets have been churning amid a poor start to the year in the US, a stock market crash in China, and almost non-stop headlines about the bailout negotiations in Greece, there has been a "stealth" correction — or decline of more than 10% — in some sectors of the US market.
And this could spell bad news for investors.
In an email on Tuesday, NYSE director of floor operations Rich Barry passed along a, "brief, somewhat disturbing market 'history lesson.'"
Barry continues: "Looking at all six-month periods since 1970, the only time we've had the S&P 500 in the green, (year-to-date), with both Transports and Utilities down more than 10% was late 1999. In other words, right ahead of a three-year bear market and a major peak that took ~16 years to fully clear."
(Google Finance) The S
By most conventional thinking, though, this makes some sense.
The big market expectation in 2015 was the this would finally be the year the Federal Reserve raised interest rates.
And given that transportation and utility stocks are usually big dividend payers and are seen as ways to get a consistent return when interest rates are expected to fall — and seen as stocks to avoid when rates are set to rise — it makes sense they would behave this way.
But Barry, one of the staunchest bulls we know, added that, "We do not think history will repeat itself, but wanted to alert you of this little market factoid."
So, no prediction of doom, but just "one of those things" that people like to point out and pass around.
The classic investing mantra is that past performance does not predict future success, but of course, all we have to go on is the past.
And the last time we saw transportation and utility stocks sell off, what happened next was ugly.
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