Had they done so, on average six months later they’d have a gain of 6.7%. And this average includes the horrible returns in the six months after the 2007 and 2008 occurrences, too.
In fact, going back over all 26 occurrences in the last 30 years shows that investors would have made money 69% of the time if they bought right after the death cross occurred and held for six months. The average return would have been 13.6%.
So forget about the Russell 2000 death cross. That is, unless you view it as a signal to buy small caps in the following weeks. More often than not, that’s a more profitable strategy then selling.
This article is brought to you courtesy of Tyler Laundon from Wyatt Investment Research.