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The last several years have brought market volatility which has not been seen since the twenties and thirties. The NASDAQ market, containing many of the high technology companies, has experienced an unprecedented rise and an equally abrupt decent. Speculative bubbles are not new to Western market economies; however, when one is in the throngs of such an event or its aftermath, it is often difficult to discern what actions to take. With this in mind, it may be prudent to look at historical precedent and any patterns that this may yield. The research at G.L. Smith has shown strong "Seasonal" price movements in the general equity markets.
Over the years, we have noticed that most price increases took place in the November to May time periods. The intuitions of a seasonal pattern in the markets were not formalized until the high volatility we have experienced in recent years caused us to seek greater risk controls. The results of our research are very convincing, and they were magnified when we used momentum indicators as an overlay to the six-month strategy. We tested the mutual funds and have found equally compelling results. Briefly stated, the emperical evidence persuades us to favor one six-month period over another. These patterns have existed for over fifty years.
In our ongoing efforts to increase returns and reduce risks for our clients, we have established a methodical program to take advantage of seasonal price patterns. We encourage you to call your advisor to see if this may be useful for your investment program.
Clients may access more information about seasonality by following this link.
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