chapter 8

Summertime blues

The ‘livin may have been easy’ in George Gershwin’s classic song ‘Summertime’ from his musical Porgy & Bess, but it pays for investors to not get too complacent during the summer months.

Over the past two decades, July has been a poor performer, averaging a monthly return of just 0.3 per cent. Fortunately, there is some respite in August, which has rewarded investors with a 1.3 per cent return for the past 20 years. However, it pays to take note when prices fail to keep up with these historic trends.

Research by stock market historian David Schwartz (2007a) reveals that, in the past 80 years, there have only been 9 occasions when the UK market suffered significant losses in the last three trading weeks of July. ...

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