Seasonal Performance

Most of market corrections and bear market down-legs take place in an unfavorable season from May to October, referred to as “Sell in May and Go Away”. Even against the massive Fed influence during the recent years the effect of seasonality has been clear. During 2012 and 2013 there was no larger correction but the market still made most of its gains for the year in the traditional favorable seasons, and moved basically sideways in the unfavorable summer season.

“A 2012 study of the 40-year period from 1970-2011, published by the Social Science Research Network, concluded that the old adage “Sell in May and Go Away” remains good advice. On average, returns are 10 percentage points higher in November to April semesters than in May to October semesters.” (Barrons)

When the market plunged in 2011 Bernanke and the Fed rushed in to double the QE from $40 billion a month to $85 billion a month. Now Fed is tapering back stimulus, and will have it back down to $35 billion in May. The current bull market is now 61 months old. Not many have lasted as long. By most valuation metrics the market is overvalued by historic standards.

Seasonal Weak Part of the Calander


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