The Investment Scientist

Does Stock Market Still Have Seasonality?

Posted on: January 12, 2021

In June of 2007, I wrote my first article on stock market seasonality. There I wrote that there was a rather persistent and robust stock market phenomenon that the market tended to perform well in the winter months than in the summer month. By “persistent” I meant that it lasted for decades in the US market, by “robust” I meant that the phenomenon showed up in other stock markets as well, as can be seen by this chart. 

Now 14 years have passed since I wrote the article. It would be interesting to see if the stock market seasonality has persisted. Examining the S&P 500 data from 2007 to 2020, I got this chart. As you can see by yourself, there is still a bit of seasonality, but definitely not as strong as before.

In my original article, I asked a rhetorical question: shall we take advantage of the observed stock market seasonality? I strongly advised against it because transaction costs and tax consequences would more than eating up whatever benefit there might be. “Do nothing” was good advice then, and still is.

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Author

Michael Zhuang is principal of MZ Capital, a fee-only independent advisory firm based in Washington, DC.

Twitter: @mzhuang

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