Investment Strategies

September is the weakest month on the Australian sharemarket calendar – and also typically kicks off a 12-week period of extreme volatility that has seen some of the biggest swings in local stock prices over the last four decades. This article looks at seasonal analysis over 30, 20, 10 and 5-years, and then we’ll test […]

Seasonality studies show that in any decade, years ending with a 5 have tended to be favorable for stocks Lets test this theory: For testing Year 5 stock market performance, we will use month-end price data for: Year 5 occurs every ten years starting in 1905 (1905, 1915, 1925, 1935, etc.). Year 5 showed a

Most investors either explicitly or implicitly understand the importance of risk-adjusted returns. This is shown by the fact that investors typically diversify to shield their portfolios from uncompensated risk. If risk was not an important consideration in portfolio construction, allocating all assets to a single security with the highest expected return would be quite common.

Did you know there are seasonal patterns in the stock market? February has historically been a flat to slightly positive month for major stock indices. The indices rise in February only abut 50% of the time, for a marginally positive average gain. January just finished with the S&P 500 up just over 2% and the

Introduction One may have seen the following graphic from an Ohioan farmer, Samuel Benner. It was originally published in 1884 where he predicted the volatility of future markets from 1924 to 2059. There is a more extensive chart if one is willing to look that uses back tested data. It is a bit tough to

There is an “unconventional” index that economists and investors use to predict economic downturns. It’s called the Skyscraper Index. Invented by Andrew Lawrence, a property analyst at Dresdner Kleinwort Wasserstein, the index was based on a relatively simple idea – that the completion of the world’s tallest building is inevitably a marker for the start

Shareholder return is the holy metric by which all equities are compared, but what factors actually influence the returns shareholders get from their equity holdings? In October 2023, Morgan Stanley’s Michael J. Mauboussin and Dan Callahan put out a paper that offers a framework of the key components that drive shareholder returns.  To clearly show

Even though gold is generally a volatile asset, it is often considered a key diversifier, hedging against inflation or protecting during economic uncertainties. Pim van Vliet and Harald Lohre conducted research on this phenomenon – and found that in times of extreme macroeconomic events, including war, hyperinflation, or major economic recessions, gold investing is widely regarded

Asset class correlations refer to the degree to which the returns of different asset classes move in relation to each other. A high positive correlation indicates that two asset classes tend to move in the same direction, while a high negative correlation implies that they move in opposite directions. Understanding these correlations can help investors make informed