Seasonality describes the increased (or decreased) odds of something happening based on what has historically tended to happen, with above or below average frequency during that time of the year

  • Stock markets tend to underperform during the summer
  • Sock markets¬† typically have strong November - January periods
  • November - April is the stock markets strongest period usually
  • Stock markets tend to do even better during mid-term elections

Seasonality Also Impact Other Industries

  • Hurricanes & Home Repair
  • Home Sales (increased in summer to prepare for new school year)
    • also drives home improvement sales (people tend to improve once they first buy)

Other Seasonality Examples:

  • Santa Claus Rally - Consumer Discretionary stocks tend to outperform between Thanksgiving and early January (when shoppers are shopping for Christmas)
  • Tax Loss Selling season (November to Mid December):¬† Investor sell losing positions to balance gains in winning positions for tax reasons
    • Has the impact of lowering stock prices
    • Temporary - and ends in January when those sellers turn back into buyers