A Question For All You Google Experts Out There

Okay, there’s something I can’t figure out.

Back in July I wrote a post titled “Should You Buy Longevity Insurance?” When I Google that title, my post doesn’t show up until four pages deep into the search results. Yet, Nickel’s post, which doesn’t even match the my title exactly, shows up at number one.

Can anyone tell me why this is? Am I doing something wrong? Any Google employees out there than can help me? LOL! I’m not looking for special treatment. I just want my posts to show up in search results.

The Best and Worst Months for the S&P 500 Index (1926 – 2006)

From 1926 – 2006, only ONE month has averaged a negative return for the S&P 500 Index*. Can you guess what month that was?

September

That’s right, only September has averaged a negative monthly return every year since 1926. Another way to look at it: had you invested your money during the month of September every year since 1926, you would have had an average monthly return of -.76%!

The best month?

The best month for the S&P 500 Index historically has been July with an average monthly return of 1.86%.

Here’s a complete list ranked by month:

The Best and Worst Months for the S&P 500 Index

Now here’s a look at each month:

The Best and Worst Months for the S&P 500 Index

It’s interesting to note that although the month of December had the greatest number of up months, it’s average performance still lagged the month July.

Finally, for those who are interested, here’s a look at the year in which the best and worst months occured:

The Best and Worst Months for the S&P 500 Index

Notice that most of them occured in the 1930s – evidence of just how volatile the 1930s were (that and it was also probably due to the fact that the index traded for a lot less than it does now, which made each point worth a greater percentage).

One last bit of trivia for you:

From 1926 – 2006, there were 972 months. Of those 972 months, 605 (62%) of them were up months and 367 (38%) were down months.

*From 1926- March 3, 1957, the S&P consisted of 90 stocks. It was expanded to 500 stocks on March 4, 1957.

Source: Appendix B of The Only Three Questions That Count (Affiliate Link) by Ken Fisher and this spreadsheet download from StandardandPoors.com. I entered the data and performed the calculations on my own.

Check Out Guarding Your Wealth

I was talking with my dad the other day and he told me about a website he found called GuardingYourWealth. It’s a website written by Jeffrey Voudrie, a Certified Financial Planner. His website is full of articles about annuities, insurance and other exciting (yes, exciting) topics.

I suppose I like Jeffrey’s website because we see eye-to-eye on a lot of topics. Like me, he’s not a big fan of equity-indexed annuities. In addition to his shorter articles, he also offers longer reports (you will have to give your email address and zipcode in order to gain access to the free report).

Anyway, there’s lots of interesting (and controversial) stuff there so go check it out.

There’s Nothing Like Being Sick on Labor Day!

Our daughter woke up Friday morning complaining of a stomach ache. My wife was helping her use the bathroom when our daughter told her that she needed to throw up. She then laid around all day and eventually started running a fever. She was like this for about 2 days and yesterday (Sunday) was a pretty good day for her.

This mornining I woke up at 5:30 with the same stuff! It’s been a horrible day! I’m finally able to write this because I took some Advil.

Anyway, it stinks because this was supposed to be the day that I laid new flooring in the boys’ bedroom. Oh well, I guess I’ll have to do it some other time. I just hope the rest of my family stays well. I’ll post more when I feel like it.

Question of the Day: Subprime Bailout

Here’s today’s question(s) of the day:

Should the government be responsible for bailing out homeowners at risk of losing their homes from foreclosure? If so, WHAT should be done?

I say no. I don’t think it should be the taxpayers’ responsibility to bailout people who got themselves into a bind. Although I’m sure there were incidences of fraud on the part of shady mortgage brokers and lenders, I think the vast majority of people knowingly took out these loans and now they must suffer the consequences. It sounds cold, but I don’t mean it to be that way. In the instances of fraud, the law should take care of that either through individual or class action lawsuits.

I definitely disagree with Christopher Dodd’s comments in response to President Bush’s subprime plan. Dodd said:

“While his [Bush’s] proposal today may not be too late, it is definitely too little. It doesn’t cover enough people, and those that are covered don’t get enough help.

“Addressing this problem is going to require bold ideas and real proven leadership – not tardy, half measures. This is a time for Presidential leadership; not a band-aid proposal, but comprehensive action to address the real cause of the crisis. That is why I have been fighting for immediate action and long term reform in the United States Senate, and why I have offered a detailed plan to add liquidity to the market, crack down on predatory lending practices, and reform the FHA.”

What the heck does he expect the President to do? Give people more income so that their mortgage payment-to-income ratio looks better? Also, what are these bold ideas? Isn’t liquidity part of the problem?

The fact is, there is no easy way out of this mess. Lots of people messed up and now we’re all going to pay for it.

Introducing the Barron’s 400 Index

This week Barron’s introduced the Barron’s 400 Index. I haven’t spent a lot of time looking at this index but it does sound interesting from a number-crunching standpoint. Their “universe” is the Wilshire 5000 Index. From there, they apply the following methodology to select the stocks for their index:

Barron's 400 Index - How it Works

And, here’s how it has performed when backtested:

Barron's 400 Index - Performance

Barron's 400 Hypothetical Growth of $10,000

Looks pretty good, doesn’t it. There’s just a few problems:

1. This is a backtest and therefore doesn’t really reflect what happens in the real world.

2. Because it is a backtest, we have no clue as to whether or not they data-mined to get these numbers. I’m not saying Barron’s would do such a thing, but you never know.

3. These numbers are for an index, not an actual investment which have investment costs. So, it is almost guaranteed that a mutual fund or exchange-traded fund that followed this methodology would trail these numbers (of course the same can be said for the other indexes in the graphic).

4. Finally, notice how it significantly trailed the other indexes in 2006, which was a good year for stocks. Why?

A couple of things I do like about this particular index:

1. The stocks are equal-weighted, not market cap weighted.

2. Large-Cap, Mid-Cap, Small-Cap, and Micro-Cap stocks are well-represented in this index:

Barron's 400 - Size of companies in Index

Wow! nearly 40% in Small-Cap stocks! Of course, the skeptic in me wonders if their sizeable inclusion is due to data mining since small-cap stocks have done really well in recent years. Of course, Barron’s does have a methodology for selecting stocks so it’s not like they just loaded up on small companies.

UPDATE: Here’s wherre you can fina a complete list of all 400 companies in the index.

Bottom Line:

I’m going to keep my eye on this one. It looks intriquing and I have a LOT of respect for Barron’s. I wonder how long it will be before this is available as an exchange-traded fund?