There’s an old joke that carries an important life lesson:
A policeman sees a drunk man searching for something under a streetlight and asks what the drunk has lost. He says he lost his keys, and they both look under the streetlight together. After a few minutes the policeman asks if he is sure he lost them here, and the drunk replies, no, and that he lost them in the park. The policeman asks why he is searching here, and the drunk replies: “This is where the light is.”
You may not have laughed at that. It’s not a very funny joke.
You also may not see the life lesson at first. The drunk is doing the easy thing rather than the right thing. Many of us do that every day. We don’t even have to be drunk. That’s why there are so many commercials for supplements that claim to lower cholesterol or shed unwanted weight. It’s easier to take one pill instead of diet or exercise.
Investors are guilty as well. As are academic researchers studying investing. I searched an academic database and found 419 papers on value investing. But there were only 14 on benefiting from seasonality in the markets.
It’s easy to understand why that discrepancy exists. Researchers need to publish for career advancement. It’s easier to research and write about something that’s well-studied. You have dozens of references at your fingertips. You can confirm what others have already verified. That’s the path to academic job security.
Seasonals, on the other hand, are more difficult to research. But they have the potential to deliver life-changing rewards to traders who apply them to their strategies…
Use Seasonals to Outperform the Market
To study seasonals, you can’t just go to the standard databases and grab information from fields that have already been well-established. You need to create some custom programming. You need to find new patterns in the data. It’s hard work, and few people are doing it.
This is where the investing lesson comes in. Few people make life-changing money in the stock market. Most use everyone else’s ideas to obtain results similar to everyone else’s.
That’s not necessarily bad. But like the drunk under the streetlight, you’re not going to find what you’re looking for. If you really want market-beating returns, you need to accept the challenge of searching somewhere that presents significant challenges (with some help, of course).
Seasonals is one area that offers significant profit potential. It’s understudied. Large investors aren’t front-running small investors like you may run into with certain value investing strategies. For example, large investors like Warren Buffett find the stocks. They report their positions. Others on Main Street start buying. Then the large investors lock in their profits and leave the little guys holding the bag.
The Power of Short-Term Trading on Seasonals
Being understudied is just one reason seasonals can beat the market. Trades based on seasonals are short term. This allows returns to compound at a rapid pace. Instead of earning 10% a year, investors using seasonals can earn 10% several times a year. That creates eye-popping gains over time.
I just completed a decade-long historical analysis on seasonals. I call this project my Apex Profit Calendar, and it’s at the core of my brand-new Apex Alert premium investing service. I found that this strategy had the power to turn every $100 invested into more than $20,000.
That’s an amazing 20,000% gain over 10 years.
Far more than the returns of NVIDIA, Tesla, Microsoft and Google during that same time.
And those returns are possible because we aren’t searching for ideas under the streetlight where almost every other investor is looking.
I’m sharing this research with a live demonstration of how my new AI-based calendar system works. Just click here to see it in action now.
Until next time,
Mike Carr
Chief Market Technician
