Excess Returns The Seven Rules of Wall Street | Sam Stovall
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Aug 5, 2025 Sam Stovall, the Chief Investment Strategist at CFRA and author of The Seven Rules of Wall Street, delves into crucial investing principles grounded in historical data. He highlights the predictive power of January market trends and discusses the merits of momentum investing versus mean reversion. The conversation covers effective sector strategies, the viability of traditional portfolios in today’s climate, and the emotional challenges of investing. Stovall emphasizes the importance of disciplined investment approaches and offers insights into client behavior amidst market volatility.
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Let Winners Ride, Cut Losers
- Let your winners ride and cut your losers short to improve returns and reduce risk.
- Buying last year's top sectors and sub-industries beats market average and wins over seven out of ten years.
Market Concentration Risks
- Technology and communication services dominate over 40% of the S&P 500 market cap.
- Attempts to avoid concentration risk with mid- and small-cap or equal weight indexes have historically underperformed during market declines.
January Barometer & Bull Market Year 3
- Positive January often signals a strong full-year market return with high probability.
- The third year of bull markets tends to be weak, often showing mixed signals and volatility before stronger returns in year four.
