Were you aware that the investment world gets the summertime blues as well? Believe it or not, in spite of the financial and investing fields being so data and statistics driven, the markets can get “moody” and the investing world has its own set of quirky superstitions about things. But the data tells the story.

While many people associate summer with warmer weather, beach vacations and more time with family and having fun, for the investment world it’s a bit different. For investors, the summer months are usually a slow time, referred to as the “summertime blues.” So far this year, the S & P 500 is up 11.02% and the Dow is up 7.71%, but the indicators have now pulled back, signaling that we should be in a more defensive posture as we head into the heat of the summer months. According to Nasdaq Dorsey Wright, when they compiled a monthly summary of S & P 500 returns going all the way back to 1958, they found that the summer months usually have a lower median return than most of the other months of the year. And it can’t be traced to just one month. All three summer months tend to be lower. Looking at the month of June over the last 60 years, there was a maximum return of only 5.45%. By contrast, all other months over the last 60 years (except February) has had a maximum return in excess of 8%.

Looking at this a different way, portfolios were compared season by season over the past 60 years and guess what the winning season was? Springtime! The initial investment in this research would have had a cumulative return of 381% from 1958 through 2018 – and an annualized return of 10.85%! The summer months paled by comparison gaining only 37% over the last 60 year period with an annualized return of only 2.1%. As you can see, the stock market definitely has its cycles. There are exceptions to this bluesy pattern. For example, the most recent three summers has bucked the trend. So, it is everyone’s guess…..er….opinion as to what this summer holds for us financially.

Traditionally, many independent investors will sell their holdings and “go to cash” waiting for the right time to jump back in, but this doesn’t have to be the only strategy available. Typically, when things are slow over the summer, sectors that do well are the items that people need regardless of the economic climate, such as consumer staples.

Remember I said earlier, the data tells the story? Technical analysis provides indicators that show us the trends of different positions held in any portfolio. By keeping up on the ebb and flow of exchange activity and the latest economic news, coupled with the technical indicators, we are able to keep our finger on the pulse of our clients’ investments.

This is why having a Registered Investment Advisor working for you gives you such an advantage. The investment of time required to research investments that will keep growing for you is quite high. You may have the time every day to keep up with the investment markets. You may understand all the information you’re reading. You might even get lucky with not finding too much conflicting information! But if you don’t have extra time each day to absorb everything you need to know about managing your own investment portfolio to its best potential, then you need someone who specializes in doing that for you. Let us help! Growing your investments well can be compared with having a money tree in your back yard. Let’s grow your investments together.

Source cited: Nasdaq Dorsey Wright Daily Equity & Market Analysis

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