Growing up on a farm, we were always conscience of the coming season. The change would come whether we liked it or not (never big fan of the dark months ..Feeding the Cows in the dark, Ice Storms, Sleet, Brrr) but we knew they would eventually come and if we did not like the coming season it would eventually work its way through on to the next season.
This was tracked by The Farmers Almanac!
Of course we never knew just exactly when, how bad … and sometimes it would even seem like it was not coming, but it would… frequently of differing severity, but at the absolute least rhyming with the season from the prior year.
Just like Summer, led to fall and fall to Winter and so on…. believe it or not, Capital Markets have seasonality too!
The Traders Almanac
Not living on a farm anymore, and having a fun occupation that entails Capital Markets, it is worth noting of the Seasonality of Capital Markets….
According to the Traders Almanac October followed closely by September are the worst two months of the year…. among many other seasonal patterns…
- Mutual Fund End of the Year Occurs during this period
- Public Company Final Quarter projections confession
- Lack of Cash Flows Due to Nearing the End of the year
- Black Out Periods of Buybacks due to earnings season
- Religious Holidays
- Quadruple Witching (Expiration of 4 Different Options Type contracts) One of largest ever last Friday
Any or all could be the reason some or maybe none…..
Pair this with extended valuations which we have been beating you with and maybe a FOMC that is sending smoke signals of tapering asset purchases….
It may be bumpy for a while….
But guess what?
Just like knowing on the farm that in December the days began getting longer, November and December are “Seasonally” the best months of the year for Capital Markets …. of course there are exceptions (2018) …
Stay buckled, we have you covered but there may be some turbulence if seasonality holds!
Have a Great “Farmers/Traders Almanac” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth