Seasonality
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