By Alec Hogg
Everyone involved in the investment markets is searching for an edge, often gained through research in areas overlooked by others. One of the most promising strategies is analysing long-term trends and identifying recurring cycles that others miss.
Yesterday, my old friend Magnus Heystek of Brenthurst Wealth shared some intriguing insights worth discussing. He cited research from one of his favourite sources, Swiss asset manager Julius Baer, which contends that the recent two-month correction in the US market aligns with historical patterns, setting the stage for a robust six months ahead.
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The graph above illustrates this trend clearly. It reveals that winters in the Northern Hemisphere have consistently generated the majority of returns for investors. Julius Baer observes, “One of the most consistent trends in financial markets is the seasonal tendency of equities and risk assets to appreciate during the winter months, from November to April.”
Using the S&P 500 as a benchmark, the asset manager discovered that an astonishing 98% of returns since 1950 have been generated during these six winter months. Furthermore, Julius Baer notes, “The two consecutive monthly declines in August and September should not necessarily be interpreted as a bearish indicator, especially as the S&P 500 remains in a medium-term uptrend.”
It seems the old market adage, “Sell in May and go away,” has some validity after all.
Sterkte
Alec
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