March's Madness I've stressed that drops in January can largely be brushed aside, and I've explained why the Dow declines in the month on a consistent basis. I've laid out why February is the most important month for investors to watch... and why we just received our biggest warning of the year. Now, in March, the Dow can achieve some staggering returns. Over the last 25 years, the blue chip index gained more than 5% in the month in 1999, 2000, 2009, 2010, 2016 and 2021. And it's gained more than 1.5% in another five years - 1996, 1998, 2002, 2012 and 2013. As I said, March has historically been a great month for stocks, posting gains 61.5% of the time since 1996. But when the Dow falls in the month, it does so in clusters. And we can see that March has been full of maddening drops for the markets since 2015. Over the past seven years, the Dow has ended March lower five times - 2015, 2017, 2018, 2019 and 2020. Importantly, this trend predates the pandemic. The worst March for stocks was at the dawn of the outbreak in 2020, though. Last month, I wrote that January's annual sell-off doesn't often bleed over into February. It has happened a mere five times since 1993. But when this does happen, it's significant. That's why it's very important to keep an eye on it. With that in mind, a Dow pullback in February has continued into March four times since 1996. This took place in 2001, 2008, 2018 and 2020. And there are a couple of interesting trends to note here. Elections and Down Years First, three of those four years were election years - the U.S. presidential elections in 2008 and 2020 and U.S. midterms in 2018. Second, the Dow ended 2001, 2008 and 2018 down at least 6%. The massive sell-off we witnessed in March 2020 marked the bottom of the short-lived bear market that year. So that means in three of the four occurrences when February's sell-off spilled over into March, the markets ended the year in the red. And most of the damage in those years unfolded in the third and fourth quarters. This is the real "March madness" investors need to be wary of. At the moment, geopolitical events are overshadowing earnings. Global markets have taken a beating over Russia's invasion of Ukraine. This triggered a rare and unwanted pullback in February. And as I wrote at the end of January, when the markets sell off in February, it tends to be steep, averaging a 4.9% decline. March, which has been one of the best months for stocks over the past three decades, has gone sour over the past seven years. These declines for the Dow in the month predate the pandemic. And if a market sell-off in February continues into March, prepare for a doozy of a year. All we can do right now is hope that cooler heads ultimately prevail in Eastern Europe. And we can hope that the situation doesn't escalate further. Investors could focus their attention back to earnings. And that could break March's recent trend of declines. Here to high returns, Matthew P.S. In January, I shared my thoughts on the Federal Reserve affecting gold prices. And because of the current geopolitical environment, these thoughts are now more relevant than ever. To learn about the factors affecting the price of gold, click here. | 
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