2024 in Review: Seasonality Edition

In these twilight days of 2024, it is a time to look back and reflect on the year that was. Yet we are also a day shy of having full-year returns, making it a mite too early for a proper report card of sector and regional performance. But there is one thing we do have juuuuust about enough data to discuss: seasonality. Whatever else happened in 2024, this year showed once again that seasonal sayings don’t predict.

When covering seasonality, we usually focus on the big four. There is The January Effect, which holds that as January (or its first five days) goes, so goes the year. Sell in May and Go Away, which holds that selling at the beginning of May and staying out either until the St. Leger horserace or Halloween is the way to avoid a slump. September Is the Worst Month, which is as it sounds. And The Santa Claus Rally, which supposedly predicts a rollicking good time in December (or its final five trading days plus January’s first two).

None of these is a reliable indicator. All work some of the time, enough to confirm the popular biases. But not with any regularity, and in any given year, you might have some, all or none work. This year, with one trading day left to go, they get an F.

The January Effect half-worked. The S&P 500 returned 1.7% that month, and given it is up 25.5% on the year through Monday’s close, it seems safe to say an up January predicted an up year.^[i] Hip hip! But the first-five-days version didn’t work. The S&P 500 closed down -0.1% for the year on January’s fifth trading day.^[ii]

Sell in May was a clear-cut dud. From April 30 through September 13—the day before the St. Leger Stakes—the S&P 500 rose 12.3%.^[iii] From April 30 through Halloween, it jumped 14.1%, generating over half the full year’s return.^[iv] The seasonal myth says this six-month stretch is historically the year’s weakest, but that wasn’t the case in 2024. Rather, of the six-month samples in the books far, that honor looks set to go to June 30 – December 31 unless a New Year’s Eve rally edges it above March 31 – September 30.

As for the worst month, it wasn’t poor, unloved September—often touted as the year’s only month with a negative average return. This year, April was worst, down -4.2%.^[v] September’s 2.0% rise was good enough for seventh best.^[vi] October, sometimes mashed with September into “Financial Hurricane Season,” was down at -1.0%.^[vii] But the two-month stretch was still positive, not a storm.

So the unpleasant seasonal indicators didn’t work. Alas, neither did the happy one, ye olde Santa Rally. With one day left, December is in the red. So is the post-Christmas stretch, more Bah, humbug! than Ho, ho, ho! Alas, maybe next year.

Still, stocks had a jolly good 2024. That doesn’t predict 2025—no calendar patterns do!—but it is still worth raising a steaming mug of hot cocoa to.