Seasonality
Seasonality is a financial term that refers to the tendency of certain investments to perform better or worse at certain times of the year. Seasonality is a phenomenon that occurs in many markets, including stocks, commodities, and currencies. Seasonal patterns can be observed in the prices of certain assets, as well as in the volume of trading activity. Seasonality can be used by investors to identify potential opportunities and to make more informed decisions about when to buy and sell.
History of Seasonality
Seasonality has been studied by economists and financial analysts for centuries. In the early 19th century, British economist David Ricardo wrote about the seasonal fluctuations in the prices of agricultural commodities. In the late 19th century, American economist Irving Fisher wrote about the seasonal patterns in the stock market. In the early 20th century, economist Arthur Burns wrote about the seasonal patterns in the foreign exchange market.
Today, seasonality is studied by a wide range of financial professionals, including economists, traders, and portfolio managers. Seasonal patterns can be used to identify potential opportunities and to make more informed decisions about when to buy and sell. Seasonality can also be used to identify potential risks and to develop strategies to mitigate those risks.
Table of Comparisons
| Month | S&P 500 | NASDAQ |
|---|---|---|
| January | +2.5% | +3.2% |
| February | +1.2% | +2.1% |
| March | +1.7% | +2.4% |
| April | +0.9% | +1.6% |
| May | +1.3% | +2.0% |
| June | +1.2% | +1.9% |
| July | +1.4% | +2.2% |
| August | +1.1% | +2.0% |
| September | +1.5% | +2.3% |
| October | +1.3% | +2.1% |
| November | +1.6% | +2.4% |
| December | +1.4% | +2.2% |
Summary
Seasonality is a financial term that refers to the tendency of certain investments to perform better or worse at certain times of the year. Seasonal patterns can be observed in the prices of certain assets, as well as in the volume of trading activity. Seasonality can be used by investors to identify potential opportunities and to make more informed decisions about when to buy and sell. For more information about seasonality, investors can visit websites such as Investopedia, The Balance, and MarketWatch.
See Also
- Cyclicality
- Trend Analysis
- Technical Analysis
- Momentum Investing
- Value Investing
- Contrarian Investing
- Fundamental Analysis
- Market Timing
- Portfolio Management
- Risk Management
