Mark Twain said, “There are three kinds of lies:  lies, damned lies, and statistics.”  With the approaching election we are inundated with commercials showing statistics that are sometimes informative but in other cases are misleading and irrelevant.  We also hear a lot of statistics about whether the market will rise or fall.  Are these statistics meaningful?  I’ll let you decide.

The Fed cut rates in September and is expected to cut again in November.  What does that mean for stocks?  Here are the stats:  The S&P 500 has rallied over every easing cycle since 1970, with the exception of 2001-03.  Over the rate-cutting cycles stocks saw a average rise of 21 percent and a median rise of 15 percent. 

October is a scary month for stocks.  The crash of 1929 and 1987 both came in October.  Analyst Jay Kaeppel looked at performance across a decade and found some Octobers were bullish while others were bearish.  Starting with the year “0” (i.e. 1900, 1910, etc.) and ending with year “9” (1909, 1919, etc.) Kaeppel found that if you invested only in the Octobers with years “0” through “6” you would have a gain of 170 percent.  If, however, you invested during the years “7” through “9” you would have lost 59 percent.  Fortunately, we are in year “4.”

In another Jay Kaeppel study, he looked at the seven worst performing weeks dating back to 1967.  The week after options expire in October was one of those worst performers.  This year, the bearish week is October 23 through the 27^th.  Starting in 1967, if you invested $1,000 and only bought and held during the seven worst weeks you would have lost 74 percent.   

Statistics like these may or may not be meaningful, but what is important is the trillions in cash and money-market funds, some of which is being deployed to better-yielding stocks and bonds.  According to Jill Carey Hall at Bank of America Securities, equity inflows right after the Fed rate cuts were the largest in two years.  As I’ve written many times in the past, money flows will be the fuel that will push the bull market higher.

Money-market funds yield about 4.6 percent now and will fall more by year’s end.  No one knows where they’ll bottom.  These funds have been a comfortable area for investors but it will be less rewarding moving forward.  That’s bullish for stocks, statistics be damned!

David Vomund is an Incline Village-based Independent Investment Advisor.  Information is found at http://www.VomundInvestments.com or by calling 775-832-8555.  Clients hold the positions mentioned in this article.  Past performance does not guarantee future results.  Consult your financial advisor before purchasing any security.