Evaluating the Tabulations
June 24, 2009 by admin · Leave a Comment
Although gains were recorded in most months during both the favorable unfavorable six-month periods, there has been a considerable difference in magnitude of the average gain achieved during favorable seasonal periods unfavorable periods. (Stocks advance approximately 75% of the time but, apparel there are advances and, then again, there are advances.)
Returns during unfavorable six-month periods have averaged just a bit than 1% per period, with the rate of return while invested approximately 2% annum, less than risk-free interest rates in most years. As a rule, investors which have been better off in the stock market for just six months each year and six months than being fully invested at all times (although this is not true for every year, of course).
The performance of this seasonal six-month period timing model has been essentially similar to the Nasdaq/NYSE Index Relative Strength Indicator and the 3- to 5-Year Monetary Indicator, which also produce virtually all net market gain within defined and limited holding periods. These “mood indicators” are not precise on their own in terms of market timing, however, so they are probably best employed as an influential backdrop to inveshnent decisions based upon more specific timing tools or as a consideration for decisions regarding the extent to which you want to be invested at any time.
There certainly do appear to be significant differences in performance between the favorable and unfavorable six-month periods.