Bruce Campbell of StoneCastle Investment Management believes there are at least three good reasons to invest in 2015.
Resource investors are no doubt familiar with the adage “sell in May and go away,” but they may not have heard its counterpart, “buy it when it snows, sell it when it goes.”
It’s that second sentiment that Bruce Campbell, founder and portfolio manager at British Columbia-based StoneCastle Investment Management, discusses in a recent article for BNN. As he explains, historically the best time to invest is from the last week of October to the beginning of May, and thus far that has held true in 2014.
However, what’s even more auspicious, he states, is that we are in the third year of the presidential cycle and are about to enter a year ending in the number five. The former is significant because the “third year of the USA Presidential Cycle has produced the highest rates of return of any year in the four year cycle,” while the latter is important because “[y]ears ending in 5 are no ordinary years.”
That might sound silly, but according to Campbell, there’s actually “a strong historical bias to the number the year ends in.” Summing it up, he notes that years ending in three “tend to be good years,” while “years ending in 4 are lackluster years.” By contrast, years ending in five “are strong years.” Indeed, looking at the last nine decades worth of data on the S&P/TSX Composite index (INDEXTSI:OSPTX), years ending in four have been positive 55 percent of the time, with an average loss of 1 percent, while years ending in five have had positive returns every year, with an average return of 16 percent.
The data for the S&P 500 (INDEXSP:.INX) covers an even greater period of time and yields similar results.
Campbell ends by providing some stock picks, and though they aren’t from the resource sector, his words may still provide some hope for those in the space. After all, if he’s correct then there will be at least three good reasons to buy once we hit 2015.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.