Intro B&H101 Under the Oak The Mom Chronicles Wall Street History Week in Review Glossary Financial Planning Understand Taxes   "BUYandHOLD" Tax FAQ   The 13 Steps to Investing Foolishly   Carlson on Taxes Archives Seasonal Trends Brian Trumbore President/Editor, StocksandNews.com *I thought I'd beat everyone to the punch, as we approach a key date, historically, April 30. Back in 1986, Yale Hirsch discovered one of the most powerful principles of investing, that being that if you invest only during the November 1 - April 30 stretch, over time you will have far more success than investing in the corresponding period, May 1 - October 31. And it's not even close. For example: $10,000 invested in the Dow Jones on May 1, 1950 and taken out October 31, repeating this exercise through 2000, would have resulted in that portfolio's growing only to $11,743. But, if you took $10,000 and invested it only during the period 11/1 - 4/30, you'd have a portfolio worth $415,890. [Figures do not include dividends.] Incredible, isn't it? For the S&P 500, the figures are $314,056 vs. $11,408. However, regarding the S&P, if you add in the period 5/1/01-10/31/01, the return on your $10,000 is only $9,673. Why? No one ever mentioned this fact last fall, but it is negative because you're compounding the $11,408 by a negative return of 15.2% in the S&P for that 5/1-10/31 period. [These numbers were not available for Hirsch's 2002 almanac.] The key, of course, is the power of compounding, and while there has never been a 20% gain for the period 5/1-10/31 in the Dow Jones since 1950 (I do not have the data in this regard for the S&P, but I suspect it is the same), there have been 8 such Dow gains for 11/1-4/30. Additionally, it should now be no surprise to you that the four best months for both the Dow and the S&P are Nov., Dec., Jan., and Apr., again, all within the 11/1-4/30 time frame. Monthly returns for the Dow Jones, Jan. 1950 - Apr. 2001 November...1.4% average percentage change December...1.8% January...1.6% February...0.2% March...1.0% April...2.0% May...-0.1% June...0.1% July...1.2% August...0.03% Sept....-0.6% Oct....0.3% Now the S&P 500 November...1.5% December...1.8% January...1.6% February...-0.01% March...1.0% April...1.4% May...0.2% June...0.3% July...1.1% August...0.1% September...-0.4% October...0.7% [In Hirsch's almanac, there are slight discrepancies in some of the S&P monthly return figures, but by only one-tenth of one percent. *Different #'s in separate parts of the book.] *Nasdaq has been around only since 1971 and the returns are skewed by two, minus 22% months, Nov. 2000 (-22.9%) and Feb. 2001 (-22.4%), so I wouldn't place too much weight on these. Nonetheless, for January 1971 - April 2001: November...1.2% December...2.5% January...4.3% February...1.1% March...0.2% April...1.4% May...0.9% June...1.5% July...0.04% August...0.5% September...-0.2% October...-0.6% What the Nasdaq figures do clearly point out is something you have heard before; tech stocks do not historically perform well in the period June - October. Lastly, here are just a few other numbers that help establish just what an awful 3-year stretch the markets have witnessed. Dow Jones April 30, 1999...10789 April 30, 2000...10733 April 30, 2001...10734 April 24, 2002...10030 S&P 500 April 30, 1999...1335 April 30, 2000...1452 April 30, 2001...1249 April 24, 2002...1093 Nasdaq April 30, 1999...2542 April 30, 2000...3860 April 30, 2001...2116 April 24, 2002...1713 It can only get better from here, right? Sources: Yale Hirsch's "Stock Trader's Almanac 2002," as well as proprietary data, which I deem to be accurate. Brian Trumbore The securities markets are subject to the risks of fluctuating prices and the uncertainty of rates of return and yields inherent in investing and past performance is no guarantee of future results. The information has been obtained from sources we believe to be reliable, but we do not represent that such information is complete or accurate, and it should not be relied upon as such.

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