This is Part 1 of a Mini-Blog Series.
Part 1: Where The Money Is Made & Lost
Part 2: Presidential Cycles
Part 3: The Four Quarters
Part 4: The Twelve Months
Our Top & Bottom 20% cover a range of 151 months each, while the middle 60% covers the remaining 454 months. If you’ve ever wondered why so few traders can consistently outperform the benchmark S&P 500 index, the chart below illustrates an edge towards the winners.
To truncate, if you avoid the worst month, you might sidestep a -5.54% loss, but if you misstep the best month, you will have lost out on a 6.29% gain. In the meantime the middle months (where most of our time is spent) have a strong upside bias.
-The Top 20% has an average monthly gain of 6.29% and cumulative gain of 980%
-The Bottom 20% has an average loss of -5.54% and cumulative loss of -836%
-This difference gives the Top 20% a monthly edge of .75% and cumulative total edge of 144%.
- The Middle 60% has an impressive 67% win ratio, average gain of .88%, and cumulative gain of 399%.
So at face value, even if we could avoid a Bottom 20% month, the risk of also avoiding a Middle 60% month or a Top 20% month puts us at a statistical disadvantage.
View attachment 60785
Bonus: April 2024’s -4.16% loss ranks as the 91st worst month, so it does fall within the bottom 20%, but I did not include 2024 data in the study above.
After a Bottom 20% month, the following month had a 60.9% win ratio with an average gain of 1.13%. This is higher than the 63-Year average monthly gain of .68%
View attachment 60786
Cheers...Jason
Part 1: Where The Money Is Made & Lost
Part 2: Presidential Cycles
Part 3: The Four Quarters
Part 4: The Twelve Months
Our Top & Bottom 20% cover a range of 151 months each, while the middle 60% covers the remaining 454 months. If you’ve ever wondered why so few traders can consistently outperform the benchmark S&P 500 index, the chart below illustrates an edge towards the winners.
To truncate, if you avoid the worst month, you might sidestep a -5.54% loss, but if you misstep the best month, you will have lost out on a 6.29% gain. In the meantime the middle months (where most of our time is spent) have a strong upside bias.
-The Top 20% has an average monthly gain of 6.29% and cumulative gain of 980%
-The Bottom 20% has an average loss of -5.54% and cumulative loss of -836%
-This difference gives the Top 20% a monthly edge of .75% and cumulative total edge of 144%.
- The Middle 60% has an impressive 67% win ratio, average gain of .88%, and cumulative gain of 399%.
So at face value, even if we could avoid a Bottom 20% month, the risk of also avoiding a Middle 60% month or a Top 20% month puts us at a statistical disadvantage.
View attachment 60785
Bonus: April 2024’s -4.16% loss ranks as the 91st worst month, so it does fall within the bottom 20%, but I did not include 2024 data in the study above.
After a Bottom 20% month, the following month had a 60.9% win ratio with an average gain of 1.13%. This is higher than the 63-Year average monthly gain of .68%
View attachment 60786
Cheers...Jason
