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Saturday, October 5, 2013

How Seasonality Affects the Stock Market in Q4

"It is easy, by diligent study of the past, to foresee what is likely to happen in the future..." - Niccolò Machiavelli
The September swoon was milder and contained this year, but the S&P 500 retreated 4% from its mid month peak to its end of month low, providing an opportunity for investors. If Washington gridlock continues and markets stumble, history suggests investors willing to take a long view will profit from buying risk.
Rewarding markets into year-end
A lot of attention is focused on the risk investor's face in September and early October. But, risk



and reward go hand in hand and historically those investors willing to step in and buy markets in October have made money.
Over the past 10 years, the S&P 400 (MDY), Russell 2000 (IWM) and MSCI EAFE (EFA) have all posted gains 8 times. The S&P 500 has gained 7 times and median returns for all the major market ETFs have exceeded 5% for the period.

Curious what the best stocks are during the final quarter?  Buy the seasonality database for less than a visit to Starbucks.

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Source: Seasonal Investor Database
(click to enlarge)