FYI: There’s a two-out-of-three chance that, on Dec. 31, the stock market will be higher than it is today.
That certainly appears to be good news, since the Dow Jones Industrials Average DJIA, -0.62% is already sitting on a year-to-date gain of more than 15% (assuming dividends were reinvested). Additional gains would assure 2019’s place in the record books as one of the better ones in U.S. history.
Unfortunately, this news isn’t as good as it appears. The odds of a rising market between July and December would be the same even if equities today had produced a year-to-date loss.
That’s what I found upon feeding into my computer’s statistical package the historical data for the Dow Industrials back to its creation in the late 1800s. Over the 120-plus years since then, the Dow has risen 66.4% of the time from July through December. In years in which the Dow rose in the first half of the year, the odds of a positive second half were 72%.
That difference between 66.4% and 72% is not significant at the 95% confidence level that statisticians often use when judging whether a pattern is genuine. In other words, our best guess from a statistical point of view is that the stock market’s second-half odds are independent of its performance in the first half.
Regards,
Ted
https://www.marketwatch.com/story/chances-are-the-us-stock-market-will-be-higher-by-year-end-but-theres-a-catch-2019-06-25/print
