Happy Thanksgiving
I’m sure you’ve heard of it: “Sell and go away in May”. We get asked about it every year. Traditionally the period beginning May 1st through October 31st is weak for the Dow industrials. Peek at the figure 1.
Astonishing isn’t it? $10,000 every November 1st and sold every April 30th grew to $1,135,173, WOW!
Had you invested $10,000 in May of 1950 and sold every in October 31st grew to $10,684 – kind a lame, huh?
The result is astonishing if only they mattered in a substantive way. If you had invested in January 1st 1950 and held it until 2018, what happened? Look at figure 2., You would end up with $1,100,827, a $34,347 difference compared to buying and selling based on the season. And, if you take the effect of taxes and transaction costs, you’d be better off leaving it alone, in my opinion.
Does seasonality ever matter?
Yes, during recessionary periods, almost always.
| Recessions | DJIA % Change: Weak Period | DJIA % Change: Strong Period |
| 1990 | -8.1% | 18.20% |
| 2000 | -15.5% | 9.60% |
| 2001 | -15.5% | 1.00% |
| 2007 | 6.60% | -8.00% |
| 2008 | -27.90 | -12.40% |
Congratulations we are at the start of the Strong Season. Let’s hope the recent market bullishness continues unabated until April. Then we’ll enjoy spring and summer as there is not recession in sight the warm season may be more enjoyable.
Our portfolios are exhibiting slightly higher levels of cash than in the recent past.
Carlos Dominguez – CERTIFIED FINANCIAL PLANNER™, Portfolio Manager, RJFS
When you get a minute try out our risk discovery tool – tell your friends
https://windsorwealth.management/my-risk-o-meter/
Data courtesy of Dorsey Wright, Trader’s Almanac, Seeking Alpha and Thompson Reuters: graph courtesy of Windsor Wealth. – Due to rounding error some of the results are slightly different than the raw data in Trader’s Almanac
https://seekingalpha.com/article/1183461-seasonal-patterns-in-stock-markets-319-years-of-evidence
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