NEW YORK (TheStreet) -- Don't sell in December and go away!
The S&P 500 (^GSPC) is up 27% year-to-date and that has many investors wondering if money managers may soon start locking in gains in the next week. The rally is so strong that it ranks ninth in January-through-November performances since 1945, according to S&P Capital IQ. Despite the strength of the advance, however, history says investors should let their winners ride.
"Since 1945 whenever the S&P 500 increased by greater than 15% year-to date through November, which is more than twice the average gain, the '500' rose more than 2% in December and advanced in price greater than 70% of the time," says Sam Stovall, Chief Equity Strategist at S&P Capital IQ.
The carry-through momentum is even more encouraging for the bulls from a sector perspective, says Stovall.
"Whenever a sector recorded a YTD-November price gain of 15% or more, it went on to post an average price advance in December of as little as 1.3% for Energy to as much as 5.2% for Consumer Staples," says Stovall. "What's more, all 10 sectors rose in price at least 67% of the time in December following strong YTD performances and some, such as Consumer Discretionary, Consumer Staples and Utilities, did even better, increasing in price 90%-100% of the time."
Finally, if the good times continue, don't unload your stocks at the end of December either. When stocks are up over 20% or more in a year, says Stovall, they are up an average of 10% the following year vs. around 8% for all years.
"Good years tend to follow great years," says Stovall.
That's great news indeed for the bulls this holiday season.
-- Written by Gregg Greenberg in New York