! Using Seasonal and Cyclical Stock Market Patterns
Jeffrey Hirsch is chief market strategist at the Magnet Æ Fund and editor-in-chief of the Stock Trader’s Almanac. His latest book is the “The Little Book of Stock Market Cycles” (John Wiley & Sons, 2012).


Fred from Utah posted over 4 years ago:

It would have been helpful if you had published this article in March or April

Walter from New Jersey posted over 4 years ago:

I may be totally confused, but it appears to me that the article totally contradicts what has occurred in the market during the full 5 months of January through May of this year. Apparently the article may have been written in January or February of this year, and if so there appears to be no correlation between the author's theorems and what stocks are doing today. Maybe by the end of June the analysis will begin to make more sense. But if I'm reading this correctly, it certainly does not bode well for the remainder of 2013.

wmdietz from PA posted over 4 years ago:

Great article picking up suggestions after the fact. How about suggestions for now, looking forward. This article is just an advertisement for the Almanac. Shame on AAII.

Bruce Campbell from NC posted over 4 years ago:

The author left just enough out of this article to make you want to read the book. I recommend it highly. And the Stock Market Almanac should be on everyone's book shelf.

david harned from va posted over 4 years ago:

If the data in the stock traders almanac is correct, it would appear that the most logical approach to increase total returns would be the exact opposite of that recommended in your "more conservative" recommendation. If one wants to "buy low/sell high", it would appear to make more sense to shift out of cash into stocks in the months of May, June, August & September, and sell off stocks & go to cash in January & April. This might make some sense for someone who simply wants to "play the market" and not focus on picking quality stocks for the long haul. Personally, I think it makes a lot more sense to buy quality stocks at the right price and hold them until there is a proper sell point...which may vary considerably among positions in a properly constructed portfolio.

Daniel Ballisty from CA posted over 4 years ago:

This is a basic premise, but market fluctuations are the result of money flows, and money flows tend to follow a seasonal character. I am not certain if this seasonality can be observed at each individual equity, but it is apparent at the DIA and S&P500 indices. I've heard some call it favorable/ unfavorable seasons. This year is unique in that there is additional liquidity brought to bear on the market through QE.

Werner Emmerich from PA posted over 4 years ago:

I can think of many other such guidelines, including: Bad Thanksgiving, good Santa Claus. It's a good sign, if recovery from a bear market exceeds 50%. Bear Market bottoms are steep, Bull Market tops are flat. Second biggest economy is ahead of the biggest, (Low interest rates in Japan 13 years ago vs. US rates more recently,) etc.

Tom from TX posted over 4 years ago:

This is a good article. To those that think it's not forward looking, remember that there is a December and a January in every year. And those of you who don't get the Stock Trader's Almanac, you should.

Harold Skelton from ME posted over 4 years ago:

Give a drunken monkey a machine gun and 10,000 rounds of ammunition. Have him blaze away at a barn wall until every shell is fired. Euthanize the monkey. Go look at the side of the barn. 31% of the bullets struck the upper-right quadrant of the wall. Increasingly smaller percentages struck the other three quadrants. It is accurate to say that "in the data we examined, upper-right bullet strikes were the most common outcome." The problem arises when we make the further assertion that these past results are predictive of future outcomes.

Stock market results provide a rich field of data. Looking back at those results, it will always be possible to correlate any selected result to some contemporaneous event or condition. It does not follow that there is any causative connection between the two, or that the event or condition is predictive of future outcomes.

Then again, who's interested in reading an an article entitled "Seasonal and Cyclical Stock Market Patterns -- As Likely to Be Explained by Random Outcome as by any Other Cause."

Roger Mckinney from OK posted over 4 years ago:

I think all of the indicators are good, but the election indicator is probably right for the wrong reasons. Federal spending is just 20% of the economy and many estimates of the multiplier are small, so I doubt it affects the economy that much. In addition, federal spending would affect profits only, but growth in the PE ratio, which indicates greater risk tolerance by investors, account for about half the variation in stock prices.

My guess is that what he calls the election cycle is really the business cycle, which averages 4 to 5 years over the long run. Understanding the business cycle and how it affects the stock market is import for avoiding major downturns in the market. rdmckinney.blogspot.com

Edward Japhe from GA posted over 3 years ago:

1- Am I correct in understanding that the years not shown in Table I on page 11 of this article were those years that the three indicators were collectively negative , since all of the shown years show them to be all positive?

2- Am I correct that although all three indicators can be positive, they of course cannot always result in a positive year, as illustrated particularly in the year of 1966 when the 11 months and full year were negative by 13.5% and 13.1 % respectively?

Charles Rotblut from IL posted over 3 years ago:

Hi Edward,

The table is showing when all three indicators are positive. No timing indicator (or set of indicators) is routinely perfect. More importantly, just because a pattern has existed in the past, there is no guarantee that it will continue to exist in the future.


David Harned from VA posted over 2 years ago:

This appears to be little more than a rambling diatribe on "voodoo trading" that has very little, if anything, to do with long-term investing. Sticking with fundamental analysis just might yield better long-term results.

Dick Marr from NY posted over 2 years ago:

I've been using the 'Stock Pickers Almanac for a long time and I gotta tell you,it has more useful insights than anything else I've ever found. Insights and Observations to be incorporated into a thoughtful investing strategy.It's perspective is very strategic and certainly not infallible...simply a well documented collection of facts.

Michael Dwyer from IL posted 7 months ago:

I have successfully bought oversold small cap stocks in December that bounced hard in January. Works particularly well if you have a IRA and don't have to pay a capital gain tax
of course not all oversold stocks bounce and thus the investor needs understand why the stock sold off and its bearing on that stocks future prospects

E Kast from VA posted 7 months ago:

Has anyone tested a strategy of combining the "best six months" strategy with the presidential cycle approach? For example, rotate out of stocks for May through October ONLY in the first two years weaker years of the presidential cycle?

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