"Seasonality refers to particular time frames when stocks/sectors/indices are subjected to and influenced by recurring tendencies that produce patterns that are apparent in the investment valuation. Tendencies can range from weather events (temperature in winter vs. summer, probability of inclement conditions, etc.) to calendar events (quarterly reporting expectations, announcements, etc.). The key is that the tendency is recurring and provides a sustainable probability of performing in a manner consistent to previous results."
Seasonality is a big part of my investment process. After doing this for a while you begin to notice seasonal patterns that often repeat almost every year. For instance, the S&P 500 usually enters a period of weak seasonality from August-mid October. Over the years, some of the best times to invest and go long stocks is in late September/early October.
Now seasonal patterns don't always repeat every year. However, studying the past can give us a clue as to what markets could do in the future!
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