Ken Fisher once told me to always expect the unexpected. He was talking about stocks. What he meant was that stocks rarely do what everyone expects them to do. For example, on average, stocks have done worse in September than in any other month. Many investors were betting the same would be true this year.
It wasn't to be. The S&P 500 surged 8.76% this September, which was more than enough to push the index into positive territory for the year. In fact, during the past 20 years (i.e. 240 months), the S&P 500 has done better than that on only three occasions. It gained 11.16% in December 1991, 9.67% in March 2000, and 9.39% in April 2009.
Our Forbes Special Situation Survey portfolio went along for the ride and then some. It gained 10.88%. Terex Corp. (TEX) did the best, surging 22.31%.
I continue to hold a bearish view on the economy. Housing and employment are what I worry about the most. Nonetheless, I am still avoiding bonds. Because interest rates are so low, bonds are too risky for my taste. I would rather hold a mix of cash and selective stocks.
