Now is the time to put hay in the barn, literally and figuratively.

I keep a few horses on my property. They are mostly entertainment for my kids and grandkids, although I certainly enjoy them as well. In Utah we’ve endured a particularly hot and dry summer. Because of the drought conditions, hay production is well below normal years. We’ve probably still got a few weeks of good fall weather left, but inclement conditions usually hit hard sometime in October. In preparation for those nasty days, area livestock owners are taking advantage of these last few good weeks to fill their barns with hay. My loft is full and in the next few weeks, I’ll be adding more to my supply. By the middle of October, I’ve got to have enough to last until a new crop of hay is ready in May 2008.

For investors, this is also traditionally a good time to put hay in the barn. The period from September through the end of the year has historically produced more market gains than any other season. Thanks to the Federal Reserve’s slashing of interest rates, that is likely to be the case again this year.

The cart below shows the price action of the Nasdaq over the past two years. Notice that the market advanced in the fall of 2005 and 2006. The rally in 2006 was the strongest in several years. Now it appears that stocks could be on the verge of another strong run in spite of record oil prices and sub-prime mortgage woes. It would be surprising if this advance were as strong as the one that ended 2006. But it would not be surprising to see stocks end the year several percentage points higher than current levels.

Over the past three months the market sectors with the highest returns have been natural resources (oil and energy), technology, or emerging markets. There is a high probability that these sectors will continue to lead if this rally endures. Below is a list of the top 30 ETFs and their three-month returns. Note that funds with the word “ultra” as part of their name are generally performance enhanced. That means their volatility is increased (and their gains or losses) buy using options, futures, or other types of derivitives.

Have a great weekend.
F.S.

If you would like an investment strategy that attempts to minimize risk but still provides the opportunity for solid growth, check out the Foundation Strategy from Strategis Financial Group. This actively managed strategy is designed to take advantage of the experience and expertise of some of the nation’s best mutual fund managers. To learn more, call me, Flint, at 800-279-3377.

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This entry was posted on Thursday, September 20th, 2007 at 6:32 pm and is filed under Newsletter. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.