Tags: Krisiloff | stocks | market | bull

Money Manager Krisiloff: There's Strong Precedent for Stocks Rising Rest of Year

By Dan Weil   |   Tuesday, 26 Aug 2014 11:58 AM

Scott Krisiloff, chief investment officer of Avondale Asset Management, offers powerful evidence for those who think stocks will rise during the remainder of 2014.

"Since 1950, the S&P 500 has been positive through August 42 times," he writes on the firm's website. "The market has continued to rise in all but eight of those years. The average increase between September and year-end has been 3.9 percent."

The S&P 500 has risen 8.2 percent this year, excluding dividends. A 3.9 percent gain from Tuesday's close of 2,000.02 would leave the index at 2,080.

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So why do stocks almost always sustain gains from the first two-thirds of the year?

"I usually think of the end of August as the beginning of the home stretch for a market year, Krisiloff notes.

"The finish line is in sight, and from here on out, market professionals will be especially focused on their performance, because track records get locked in at the end of the calendar year."

And how does that work to boost stocks? "In a year that stocks have risen, underperforming managers will often feel pressured to chase a rising market," Krisiloff writes.

The stock market certainly doesn't lack for bulls at this point.

"I am still bullish on the U.S. market, but I do expect the S&P 500 to consolidate and slip back to 1,950 to 1,980 range, as it's due for a rest once it climbs to 2,000," Manish Singh, head of investments at Crossbridge Capital in London, tells Bloomberg.

"Any dip will be a shallow one. The central bank and data narrative is still supportive of risk."

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