The Joseph Group

What May Changing Seasons Mean for the Markets?

October 3, 2023

To Inform:

September was not a good month for the financial markets. Looking at broad indexes, the Bloomberg Aggregate Bond Index (bonds) was down -2.5% for the month and the S&P 500 Index (U.S. stocks) was down -4.5%. The rough September translated into a rough third quarter. The chart below shows the performance of major asset classes for the three months from July – September (the 3rd quarter). As the chart shows, the only non-cash major asset class with positive performance was commodities, largely due to higher oil prices.

Source: JPMorgan Asset Management


At their most recent meeting The Joseph Group’s Investment Committee discussed whether the recent market weakness was a long-term buying opportunity. With interest rates at their highest level in close to 20 years and with many areas of the global stock market outside of big technology stocks sporting historically attractive valuations, markets appear to offer opportunities for patient investors. But how long will investors have to wait for things to turn around?

Our own Alex Durbin found the chart below and shared it with our Investment Strategy Team. The chart suggests the recent market frustrations could be short lived, and if history continues to rhyme, the 3rd quarter gloom could turn into a 4th quarter bloom.

Let me explain. The “heat map” below looks back at stock market history since 1950 and seeks to present a picture of “seasonality.” For each day of the calendar year, the chart looks at the average 10-day performance starting with that day and presents the results for each day over the 70+ year market history.

Interpreting the resulting “heat map” is relatively simple – for each calendar day, red represents the S&P 500’s worst subsequent 10-day periods while green represents the best 10-day periods…and the clusters of red and green give us a picture of seasonality.

Looking at the red and green, we can answer a few questions:

  • Seasonally, when is the “worst” historical period for U.S. stocks? Answer: September.
  • Seasonally, when is the “best” historical period for U.S. stocks? Answer: late October – December.


Source: Carson Investment Research


History may not always repeat itself, but it often rhymes (thank you Mark Twain). The rough September the market just experienced rhymes with history. But, if history continues to rhyme, markets may be in for better days. According to Ryan Detrick of Carson Investment Research, “the fourth quarter is historically the best quarter of the year, up nearly 80% of the time and up more than 4% on average, twice as much as the next best quarter.”

There are always pessimistic headlines in the media, but patterns of 70+ years of stock market data show weakness in September has often been followed by strength in the final months of the year. Every year is different, but if the seasonal pattern holds in 2023, investors may look forward to Santa Claus coming to town.





Written by Travis Upton, Partner, CEO and Chief Investment Officer