Friday, March 21, 2014

Spring Forward?

by Bespoke

Happy Vernal Equinox!  The March equinox means the cold can't last much longer for those of us living North of the equator.  Today is the halfway point between the shortest day of the year and the longest day of the year, and is the traditional start of the spring season as defined by our planet's orbit.  12:53 PM today was the first minute of spring, at least as far as astronomers define it.  Spring has been a long time coming for the Eastern seaboard, and the market is ready to get the snow dusted off.  Below is a composite chart of cumulative performance in the S&P 500 dating back to spring of 1928, broken up by season and beginning with spring.

After a bit of a rough patch to start, historically speaking the spring months have been a good period for the market, with April especially showing strength.  Winter is the best time of the year to be in stocks, but over the last twenty years (1994 - 2013) spring has been almost as good or better depending on whether you use the median or average.  The real season of strength in the last twenty years, though, has been the fall.  While it has been the worst season for equities going back to 1928, in the last twenty years it has been the best season with the S&P 500 averaging a gain of 3.76%.  What does that mean for this year?  Historical patterns are never absolute, but if history does stick to its trend the next few months could be good ones for the market before we get into a summer lull.

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