As a dedicated reader to our blog, you may have noticed that our blogging pace has slowed this summer much like the stock market. I guess you can say we are both stuck in neutral. Well we are still grinding away but have been busy with conferences and now I am on a much needed holiday to recharge and enjoy some shave ice. Don't worry I will back blogging with more regularity next week. As for the stock market, the sell in May philosophy has worked well again this year. While seasonality doesn't occur exactly the same every year, there definitely are seasonal trends that prevail in the stock market. This year, the S&P 500 has been stuck in a sideways move since June and volatility has picked up a bit as well.
Since 1950, the weakest months for the stock market have been June-September - thus the saying sell in May go away. The average monthly returns have been as follows:
Note that the only other month to have an average decline is February. So the summer months are seasonally weak ones and we still have September to endure. Hopefully it isn't a bad one and we wouldn't expect anything too dramatic given a healthy economy and strong corporate profits.
Looking ahead to the 4th quarter
The good news is that the fourth quarter is typically a strong one for the markets. Despite October being remembered for Black Monday in 1987 and a horrible month in 2008, it has traditionally been a good one for the markets; and November and December even stronger. Here are the average monthly returns: