The calendar’s not your co-pilot
There’s a longtime Wall Street bedtime story that stocks tend to do their best work from November to April. Cozy sweater season, better returns, everybody smiles. But Jim Paulsen says this time the usual playbook may be less reliable, because lagged indicators are flashing a different message.
Backtests are great until they’re not
Paulsen’s model, stretched all the way back to 1970, points to meagre returns when those indicators are doing their thing. In other words: the market may not care that a famous seasonal trade is wearing its lucky jersey.
Why this matters for investors
This isn’t a “sell everything and hide under the desk” moment. It’s more of a reality check for anyone leaning too hard on seasonality as a shortcut.
- If the macro backdrop is messy, the calendar can lose its magic.
- A backtest that looks tidy in hindsight can still disappoint in live trading.
- The real takeaway: don’t let a cute historical pattern do your risk management for you.
Big picture: seasonality can be a useful crutch, but it’s still a crutch. And markets, as usual, don’t mind kicking it out from under you.