As the calendar flips to the final quarter of the year, market participants can take comfort in historical trends that suggest a strong finish to the year. Our analysis of S&P 500 data from 1980 to 2022 reveals that the fourth quarter has consistently been the most profitable, with average returns of 4.8%. This outpaces the average gains of 2.3%, 2.9%, and 0.4% seen in the first, second, and third quarters, respectively.
What’s more, the fourth quarter has demonstrated remarkable reliability, with a winning streak of 82%. This means that investors can expect positive returns in four out of every five years, a significantly higher frequency than the 67% and 62% winning percentages seen in the first and second quarters, and third quarter, respectively.
However, it’s essential to acknowledge that the fourth quarter is not immune to volatility. Notable exceptions include the 1987 crash, which saw stocks plummet 23% following Black Friday; the 2008 financial crisis, when markets tumbled 18% in the wake of Lehman Brothers’ collapse; and the 2018 sell-off, which saw stocks slide 14% amid escalating trade tensions and monetary policy tightening. Despite these outliers, last year’s fourth quarter marked a strong rebound, setting the stage for the current bull run.
Leave a Reply