‘Tis the Season to be Overweight (Equities)

While the average and median returns of the stock market are fairly equal across the months of the year, your chances of winning are not.

Here is a figure that calculates the probability the stock market goes up in each month. This is from 1962 to 2019. I did two equal subperiods as well to show this is not a random data error. Note because the stock market has been more bullish recently this is the EXCESSS probability of going up.

You can clearly see the pattern: Stocks are most likely to increase in April and Nov/Dec.

Why? In April everyone is making IRA contributions before the Tax deadline. In Nov and Dec, everyone is trying to make 401k contributions (and related retirement investments) before the December 31st deadline.

Thus, if you like to play the horses so to speak, this is a good time to get overweight the market.

First time: 100k+ COVID Cases Today

Today the US had over 103k COVID cases – the first time over 100k. You can see we are at an all time high for cases.

This is not just more testing. Hospitalizations and Deaths are now climbing. In March, only really sick people were tested so cases, hospitalizations, and deaths were almost at the same time.

Now tests lead hospitalizations and those lead to deaths. Thus hospitalizations and deaths will continue to rise.

Again, this will slow the recovery, especially in the hardest hit sectors as states implement new restrictions.