The Winter Fund Portfolio – exploiting a seasonal trend

5 min Read Published: 01 Nov 2019

There is a recognised phenomenon in investment markets whereby, according to the Stock Market Almanac, the 1st November marks "the start of the strong six-month period of the year for stocks".

There are a whole host of theories as to why this seasonal trend may exist. They include investment managers ditching underperforming stocks at the end of the third quarter when reporting to clients, only to then bid the market up when they put cash back to work during the winter.

Other theories claim that Season Affective Disorder (SAD) could even play a part. Some researchers suggest that 'tourist' investors start taking less risk as the autumn progresses, selling out of holdings altogether in some instances. This suppresses the market during October providing value opportunities for professional investors to buy and hold throughout the winter, by which time the stocks' true market value shines through. Another theory is that it is the byproduct of the 'Sell in May' adage'

Interestingly the winter phenomenon has lead some to develop the idea of Winter Portfolios.

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