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Wall Street History

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11/05/2004

Seasonality

Back in 1986, Yale Hirsch, now Editor at Large of “Stock
Trader’s Almanac,” discovered one of the most powerful
principles of investing, that being if you invest only during the
November 1 – April 30 time period you will have far more
success than investing in the corresponding period, May 1 –
October 31. And it’s not even close.

For example:

If you invested $10,000 in the Dow Jones Industrial Average on
May 1, 1950 and took it out each October 31, repeating this
exercise through 2003, your portfolio after 54 years would have
actually shrunk $318 to $9,682. [Not including dividends.]

But, if you took $10,000 and invested it only during November 1
– April 30, your portfolio would have grown $482,060.

*For the S&P 500 the results are $349,165 and $7,102.

The key is the power of compounding, as well as the fact that the
four top months since 1950 for both the Dow and the S&P are
November, December, January, and April, all within the 11/1-
4/30 timeframe. [For the S&P it’s five months, including
March.]

Monthly returns for the Dow Jones January 1950 – June 2004

November ..1.6% avg. percentage change
December ..1.8%
January ..1.4%
February 0.2%
March 1.0%
April ..1.9%

May 0.1%
June ......-0.1%
July 1.1%
August ..-0.1%
September....-1.1%
October .....0.6%

Returns for the S&P 500 January 1950 – June 2004

November.....1.7%
December .1.7%
January .1.5%
February ..-0.1%
March ...1.0%
April .1.3%

May ..0.3%
June ..0.2%
July ...0.9%
August ..0.02%
September...-0.7%
October ....0.9%

Nasdaq January 1971 – June 2004

November ..1.9%
December ...2.1%
January ...3.9%
February .0.6%
March .0.3%
April ...1.2%

May 1.0%
June 1.3%
July ...-0.2%
August 0.3%
September .-1.1%
October ..0.5%

Source: “Stock Trader’s Almanac 2005”

Brian Trumbore

Wall Street History will return November 12.



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-11/05/2004-      
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Wall Street History

11/05/2004

Seasonality

Back in 1986, Yale Hirsch, now Editor at Large of “Stock
Trader’s Almanac,” discovered one of the most powerful
principles of investing, that being if you invest only during the
November 1 – April 30 time period you will have far more
success than investing in the corresponding period, May 1 –
October 31. And it’s not even close.

For example:

If you invested $10,000 in the Dow Jones Industrial Average on
May 1, 1950 and took it out each October 31, repeating this
exercise through 2003, your portfolio after 54 years would have
actually shrunk $318 to $9,682. [Not including dividends.]

But, if you took $10,000 and invested it only during November 1
– April 30, your portfolio would have grown $482,060.

*For the S&P 500 the results are $349,165 and $7,102.

The key is the power of compounding, as well as the fact that the
four top months since 1950 for both the Dow and the S&P are
November, December, January, and April, all within the 11/1-
4/30 timeframe. [For the S&P it’s five months, including
March.]

Monthly returns for the Dow Jones January 1950 – June 2004

November ..1.6% avg. percentage change
December ..1.8%
January ..1.4%
February 0.2%
March 1.0%
April ..1.9%

May 0.1%
June ......-0.1%
July 1.1%
August ..-0.1%
September....-1.1%
October .....0.6%

Returns for the S&P 500 January 1950 – June 2004

November.....1.7%
December .1.7%
January .1.5%
February ..-0.1%
March ...1.0%
April .1.3%

May ..0.3%
June ..0.2%
July ...0.9%
August ..0.02%
September...-0.7%
October ....0.9%

Nasdaq January 1971 – June 2004

November ..1.9%
December ...2.1%
January ...3.9%
February .0.6%
March .0.3%
April ...1.2%

May 1.0%
June 1.3%
July ...-0.2%
August 0.3%
September .-1.1%
October ..0.5%

Source: “Stock Trader’s Almanac 2005”

Brian Trumbore

Wall Street History will return November 12.