There are many quirky calendar-based trading strategies when it comes to playing the market. Some are based on typical investor behaviour at certain times of the year. Others just appear to be weird coincidences.
Many have worked historically. But if you look at more recent periods do these strategies still hold up? Not really.
The January Effect: Stocks tend to outperform in the first month of the year.
Well not in 2015. The S&P fell 3.1% this January and was down 3.6% in January of last year.
The January Barometer: If stocks rise in January, they will continue to rise for the remaining 11 months of the year.
In 2014 the S&P fell in January but rose over 15% from February through December.
Sell In May And Go Away: Stocks tend to perform worse from May through October than during the other 6 months of the year.
The S&P rose 7.1% from May through October of 2014. This is slightly less than the previous 6 months (up 7.3%) but certainly doesn’t warrant staying out of the market.
The September Slump: September is the worst month for stocks.
The S&P did fall in September of 2014, down 1.5%, but January was worse.
Sell Rosh Hashahan, Buy Yom Kippur: The trading days between the Jewish high holidays are said to be bad for stocks.
Shanna Tova! Finally, one that really worked in 2014! The S&P fell 1.5% during this period last year.
The Santa Claus Rally: Stocks are expected to rise during the last 5 trading days of the year through the first 2 trading days of the new year.
At the end of 2014 through the first trading days of 2015 the S&P 500 fell about 3%.
So maybe 2014 was a fluke for seasonal stock trends. Take a look at the following video to see how well (or poorly) these trends have fared over the past 50, 25 and 10 years.
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