Seasonality - 50 years beyond!

Today is a start of a new month which is normally low in terms of volatility.

Historically during the month of August stocks tend to generate negative returns. The above chart shows the growth of investing $100 in the S&P 500 by month starting 50 years ago.

Had you only owned the S&P 500 during the month of August over the last 50 years, your $100 would now be $99. That is a decline of 1% which is of course not very good for this long period of time.

On the chart it can be noticed that the weakest month, which is still coming up, is September and shows a decline from $100 to $70, that is a massive drop of 30% over the 50-year period!

All this can also be confirmed by our seasonality chart below.

The historic negative long-term trend in equity markets creates another case to be bullish on gold; This was already mentioned in a detailed analysis last week.

 

Chart source : Bespoke Investment Group, Investire.biz

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