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The UK Stock Market Almanac 2016: Seasonality analysis and studies of market anomalies to give you an edge in the year ahead by Stephen Eckett

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Six-Month Strategy

On page 34 we looked at the Six-Month Effect. Let’s look at how to exploit that effect in practice.

Consider two portfolios:

  1. Winter Portfolio: this portfolio only invests in the UK stock market in the winter period (1 November-30 April), and for the other six months of the year the portfolio is all in cash.
  2. Summer Portfolio: does the reverse of the above portfolio – it invests in shares only in the summer period (1 May-31 October) and is in cash for the rest of the time.

For the purposes of this simple study, we’ll assume that the portfolios’ investments track the FTSE All-Share index. The chart below shows the comparative performance of the two portfolios, each starting with £100, since 1994.

Starting with £100 in ...

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