The large weather situation on the stock market is of great importance for investors. But which seasonal patterns do you have to know?
• Sixture exchanges follow seasonal patterns
• Famous stock exchange wisdom: “Sell in May and Go Away”
• The US presidential cycle also influences the stock market development
The stock exchanges not only follow economic and political influences, but often also recurring seasonal patterns. The latter arise from regularly recurring factors such as annual reports of companies, tax framework conditions or psychological effects on the market.
In order to benefit from this, many investors rely on seasonal investment strategies, i.e. they invest their capital in the seasons on the stock market that are statistically particularly promising. So the calendar becomes a timing instrument. Many of these seasonal investment strategies concentrate on the timing of the overall market and recommend a system in market -wide stock indices using an ETF.
Sell in May and Go Away
“Sell in May and Go Away” is certainly one of the best known patterns. This old stock market wisdom is based on the fact that shares have historically developed rather below average in the summer months. Many market participants are simply on vacation.
Because the fourth quarter is traditionally considered to be strong, the remember is often added to a further rule: “But Remember to come back in September” – don’t forget to get in again in September!
Halloween effect / year-end rally
Because October is also known as the month in which the worst stock market crashes appear, many investors who retire in the summer will only return to the end of October or even in November. Since the stock markets often grow after October 31, one speaks of the so-called Halloween effect.
From here it is often over to a year -overally. On the one hand, drivers are portfolio adjustments of institutional investors who – in order to be as good as possible in their annual reports – begin to bring the winning shares of the year into their depot (Window Dressing) – which in turn causes their courses to rise further. In addition, the tailwind comes from the urge to the investment of private investors, who often want to get into a cropping mood in the run -up to Christmas and share in the Rally, which causes them to continue to drive them again.
The January effect
Small caps tend to outperformation at the start of the year. This is due to the fact that investors throw weak titles out of their depots at the end of the year and start again in January.
US election cycle
But not only in connection with the seasons, patterns on the stock exchanges can be seen. Statistically, the US presidential cycle also influences stock market development: In the second half of the term of office of a US President, this usually achieves higher stock market profits than in the first two years. As an explanation for this, President IDR will try to enforce major changes in the law in the first time after moving into the White House, while in the second half of the office they already have their re -election and therefore initiates the economic -friendly measure, which benefits the share prices.
Editor finance.net
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