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Be Ready For A Solid Fourth Quarter

By Codespeed:

During the past three years, the market has appreciated significantly during the November to April timeframe. Take a look at the performance of the S&P 500 Index SPDR (SPY) during these months.

  • 11/1/2009 - 4/30/2010: 13.89%
  • 11/1/2010 - 4/30/2011: 15.10%
  • 11/1/2011 - 4/30/2012: 14.65%

On the other hand, each year, the month of May has started a bearish trend in the entire market, causing the market to underperform during the remaining months until November.

In his book Riding The Bear (published many years ago), Sy Harding used the performance of the market indices in all the months of each of the previous 50 years to conclude that investing in the November-April timeframe produces overall better results than the remaining months. Of course, this strategy has not always worked, especially in bear markets. For example, the performance of the SPY in 2007 (-8.46%) and 2008 (-9.23%) in those months was pathetic.

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