[00:00] Have you ever wondered if you could time the stock market and boost your returns? What if we told you that certain quarters of the year might give you an edge? Today, we're diving into a 65-year backtest of the S&P 500 ETF to uncover quarterly patterns that could change how you invest.
[00:21] Stick around to learn which quarters are the best, and which one you might want to avoid. Let's get started and break down the numbers from 1960 until today.
[00:33] Here's what our backtest revealed about the SPY's average returns per quarter over 65 years. First quarter, 2.2%. Second quarter, 1.7%.
[00:46] Third quarter, 0.4%. Fourth quarter, 4.1%. The data suggests a strategy. Invest more heavily in Q1 and Q4 when returns average 2.2% and 4.1%, and scale back in Q3 when you're only getting 0.4%.
[01:07] This lines up with old Wall Street sayings like sell in May and go away since Q3 includes those sleepy summer months Now Q3 isn always bad but the numbers don lie It the weakest quarter on average
[01:23] So, should you skip it entirely? Not so fast. Timing the market has its risks. Before you start flipping your portfolio every quarter, here's what to watch out for.
[01:35] Some Q3s are great, and some Q4s flop. Patterns aren't guarantees. buying and selling racks up fees that can eat your profits. You might be liable to taxes when you sell.
[01:49] If you sit out Q3 and the market spikes, you're left on the sidelines. Use these patterns as a guide, not a rule. Maybe tilt your investments toward Q4, but don't go all in or all out based on quarters alone.
[02:04] Want to put this to work? Here's how to use quarterly patterns smartly. 1. Rebalance seasonally. Add more SPY in Q1 and Q4. Scale back in Q3.
[02:18] 2. Dollar cost average. Invest steadily but tweak amounts to favor strong quarters. If you like this video, hit that like button, subscribe, and ring the bell for more data-driven investing tips.