As I write this article the S&P 500 is up 1.4% month to date, with a max drawdown of -0.6% – which makes for a relatively joyful experience in September despite the previously mentioned sinister seasonality that typifies the historical averages for that month. Hence the weird title “what doesn’t go down must go up” – and while seasonality didn’t “work” in September, it’s worth highlighting that the final months of the year are typified by positive seasonality *on average*. If you’re happy with that then stop reading, and if you’re waiting for the ‘but’ then proceed to the next paragraph.
October, as the sinister seasonality statistics article showed in the table, while on average seeing positive returns also has the honor of having the highest best and the lowest worst return on record, and saw the largest standard deviation. In other words, historically October can be a wildcard month. This becomes interesting when you think about the wrangling for reforms in American politics (healthcare, tax cuts/reforms), the likelihood of more North Korea escalation, and the launch of Quantitative Tightening.
On that last note I turn the attention to the second chart, which shows that the historical pattern is the US dollar gets its second wind about this time of the year. This only adds to an interesting mix of moving parts as many asset classes are moving through important transition points. So, asset alligators beware for scares as the 31st of October approaches....
A Look Back At Warren Buffett’s Best and Worst Oil & Gas Investments
Warren Buffett is perhaps best known for his large investments in some of the world's most recognizable brands, companies like Coca-Cola, American Express and Apple. Q1 2020 hedge fund letters, conferences and more Companies that fit into this bracket seem to fall squarely within his circle of competence. They sell a product that's easy to Read More
This chart shows the S&P500 through 2017 YTD against the average seasonal pattern including and excluding the financial crisis, across the year 1990-2016. It seems to be walking a familiar path.
Comparing the average seasonal tendency of the US Dollar Index and the S&P500, there's an interesting pattern where both assets get their second wind around this time of the year...
For more and deeper insights on global economics and asset allocation, and some more good charts you may want to subscribe to the Weekly Macro Themes. Click through for free look or a trial.
Follow us on:
Article by Top Down Charts