The Stock Market in March

Since 1990 the market has had an average return of 0.2% in March, with returns positive in 54% of all years. This ranks March seventh among months of the year for market performance. Although as can be seen in the accompanying chart, negative returns have been seen in March with increasing frequency in recent years.

Monthly returns of FTSE All Share Index - March (1984-2017)

The general trend for the market in March is to rise for the first three weeks and then fall back in the final week – the last week of March has historically been one of the weakest weeks for the market in the whole year.

Small cap v large cap

Small cap stocks tend to outperform large cap stocks at the beginning of the year, and March marks the final month of the three-month period when the FTSE 250 strongly out-performs the FTSE 100. Since 1986 in March on average the FTSE 250 has out-performed the FTSE 100 by 0.8 percentage points.


The sectors that tend to be strong in March are: Chemicals, Industrial Engineering, Industrial Transportation, Oil Equipment, Services & Distribution, and Support Services. The Chemicals and Oil Equipment, Services & Distribution sectors have seen positive returns every March for the past 11 years. While the weak sectors in March have been: Banks, Fixed Line Telecommunications, Gas, Water & Multiutilities, Nonlife Insurance, and Pharmaceuticals & Biotechnology. The Banks sector has the worst record: it has seen positive returns in only three of the past 11 years.


For stocks, the FTSE 350 shares that have performed the best over the last ten years in March are: IWG [IWG], Clarkson [CKN], Senior [SNR], Intertek Group [ITRK], and Petrofac Ltd [PFC]. Clarkson, Intertek, and Petrofac shares have only been down in March once in the past 11 years. The weakest FTSE 350 shares in March have been Vectura Group [VEC], Lancashire Holdings Ltd [LRE], Kier Group [KIE], Renishaw [RSW], and HSBC Holdings [HSBA].


March is the busiest month of the year for FTSE 100 companies paying dividends. And it’s also a busy month for company announcements: the busiest for FTSE 250 companies in the year with 71 companies announcing their prelims this month (along with 24 FTSE 100 companies).

Aside from stocks, March has often been a weak month for gold and a strong month for oil.


It’s Good Friday at the end of the month. A famous anomaly in stock markets is that prices tend to be strong on the day preceding and the day following a holiday. This effect is strongest in the year around the Easter holiday.

Article first appeared in Money Observer

Further articles on the market in March.

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FTSE 100 and FTSE 250 Quarterly Review – March 2018

After market close on 28 February 2018 FTSE Russell confirmed the following changes to the FTSE 100 and FTSE 250 indices. The changes will be implemented at the close Friday, 16 March 2018 and take effect from the start of trading on Monday, 19 March 2018.

FTSE 100

Joining: Royal Mail [RMG]

Leaving: Hammerson [HMSO]

FTSE 250


Baillie Gifford Japan Trust [BGFD]
Bakkavor Group [BAKK]
Charter Court Financial Services Group [CCFS]
ContourGlobal [GLO]
Games Workshop Group [GAW]
On The Beach Group [OTB]
Pantheon International [PIN]


AA [AA.]
Acacia Mining [ACA]
Brown (N.) Group [BWNG]
Dignity [DTY]
Hansteen Holdings [HSTN]
Vectura Group [VEC]

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Berkshire Hathaway 2017 Annual Report

The Berkshire Hathaway 2017 Annual Report has just been released (download from here).

Below is a word cloud generated from the Chairman’s (Warren Buffett) Letter to the shareholders in the report.

BRKH annual letter 2017 word cloud 3


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Chinese New Year 2018 – year of the dog

This coming Friday, 16 February 2018, will be the start of the Chinese New Year.

The following chart plots the average performance of the S&P 500 Index for each animal year since 1950. For example, Ox years started in 1961, 1973, 1985, 1997, 2009; and the average performance of the market in those (Chinese) years was +14.0%.

NB. The Chinese calendar is based on the lunar year cycle and so performance has been calculated for each lunar year – not the corresponding calendar year.

Chinese calendar and S&P 500 [2018]

The Chinese New Year starting this Saturday will be the Year of the dog!

This is very good news for investors, as since 1950 dog years have the strongest average returns of the S&P 500 Index of any of the Chinese zodiac animals. Over the last 50 or so years the average lunar year return for dog years has been an impressive 16.8%.

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Political leader market returns

The following table shows the stock market returns for political leaders since they came into office. The table is ranked by the final column – the compound annual growth rate of the market returns.

For example, Shinzo Abe has been prime minister of Japan for 62 months, over that time the Nikkei 225 Index has risen 111.2%, which is a CAGR of 15.7%.


Political Leader Country In Office (months) Stock Market Return (%) Stock Market CAGR (%)
Michel Temer Brazil 18 41.4 27.2
Donald Trump US 13 18.7 17.7
Shinzo Abe Japan 62 111.2 15.7
Narendra Modi India 45 38.4 9.2
Angela Merkel Germany 149 139.5 7.4
Xi Jinping China 64 41.0 6.8
Lee Nak-yeon South Korea 8 4.5 6.6
Malcolm Turnbull Australia 29 16.2 6.5
Theresa May UK 19 7.1 4.4
Mariano Rajoy Spain 75 17.1 2.6
Vladimir Putin Russia 70 -16.4 -3.1
Emmanuel Macron France 9 -4.5 -6.1


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Bitcoin trend value

As of 17 January 2018 the long-term* trend value of Bitcoin is $4605.

So Bitcoin would have to fall approx 49% from its current level to revert to its trend value.

Bitcoin daily price [2012-2018] (17 Jan 2018)

*”long-term” in this case meaning from 2012.

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Nikkei 225 performance in January

The following chart plots the month returns of the Nikkei 225 Index in January for the period 1980-2017.

Nikkei 225 performance in January [1980-2017]

In the 40 years from 1950 to 1989, the Nikkei 225 Index only fell in January in 6 years. After that, as can be seen in the above chart, the record became quite a bit more patchy. For example, in the 10 years since 2008, the Index has fallen over 8% in January four times.

Further analysis of the Nikkei 225 Index in January over different time periods can be seen in the following table.

Nikkei 225 in January [1980-2017]

In the 68 years from 1950 to 2017 the Index had an average month return in January of 2.5%, and saw positive returns in 69% of years. But since year 2000 this has dramatically changed (as was also the case of the US and UK markets). Since 2000, the Index has had an average return in January of -1.6%, the worst average return of any month in this period.

The following charts plots the cumulative returns for the 12 respective months since 1980 (for more explanation of this chart see here).

Nikkei 225 Index cumulative returns by month [1980-2017]

The cumulative portfolio for January has been highlighted in the above chart.

The cumulative performance of January peaked in 2001, at which point it was the best performing month in the year. Since 2001, the cumulative performance has dramatically under-performed that of other months.

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S&P 500 performance in January

The following chart plots the month returns of the S&P 500 Index for January for the period 1980-2017.

S&P 500 performance in January [1980-2017]

The characteristic of the market in January seems to have changed around the year 2000.

In the 20 years from 1980 to 1999 the S&P 500 index only fell in 5 years. But in the 18 years since 2000 the index has fallen in 10 years.

Further analysis of the S&P 500 Index in January over different periods can be seen in the following table.

S&P 500 in January [1980-2017]

In the 68 years from 1950 to 2017 the Index had an average month return in January of 0.9%, and saw positive returns in 59% of years. But since year 2000 this has dramatically changed, with an average month return of -1.1% and positive returns seen in only 44% of years.

Since 2000, January has the weakest record of performance for the S$P 500 Index.

The following chart plots the cumulative returns from 1980 for 12 portfolios, where each portfolio invests each year exclusively in just one of the 12 respective months. (and is in cash for the other 12 months of the year).

The best performing month over this period has been April, investing in just the month of April each year would have grown an investment of $100 in 1980 to $179 in 2017.

The worst month has been September (the bottom line in the following chart): a $100 investing just in the month of September would be worth $76 by 2017.


S&P 500 Index cumulative returns by month [1980-2017]

The cumulative portfolio for January has been highlighted in the above chart.

It can see that by year 2000, January was the strongest of all the months in the year, but that record changed after 2000. By 2017 the $100 would have grown to 130.

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Santa Rally 2017

The Santa Rally describes the tendency of the market to rise in the last two weeks of the year.

In 2017 the FTSE 100 Index had a return of +2.6% in the last two weeks of the year. So the Santa Rally effect held in 2017.

As can be seen in the following chart, the Santa Rally has only failed to deliver in two years since 2000.

Santa Rally [2000-2017]

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The Stock Market in January

January used to be one of the strongest months for shares in the whole year. From 1984 to 1999 the average FTSE All-Share return in the month was 3.3%, and as can be seen in the accompanying chart in those 16 years the market only fell twice in January. But after year 2000 things changed dramatically.

Since 2000 the average market return in January has been -1.6% with the market seeing positive returns in only six years, and in four years since 2000 the market has fallen more than 5% in the month. This makes January the worst of all months for shares since 2000.

Monthly returns of FTSE All Share Index - January (1984-2017)

January Effect

In the stock market this month is famous for the imaginatively-titled January Effect. This describes the tendency of small cap stocks to out-perform large caps in the month. This anomaly was first observed in the US, but it applies to the UK market as well. For example, since 1999 the FTSE Fledgling index out-performed the FTSE 100 Index in January every year until 2015. The small cap index under-performed large caps again in January 2016, suggesting that the anomaly was no more. But the historical trend re-asserted itself in 2017, with small caps out-performing large caps by 3.9 percentage points in January last year.

Outlook for 2018

Since 1800 the market has generally been relatively strong in the eighth year of the decade. It has been especially strong since 1958, with an average annual return of 11.0% and up every eight year of the decade until…yep, 2008. In that year the market fell 33% ­which has rather dented the performance of the decennial eighth years. Remove 2008 from the calculation, and the average annual return in eighth years since 1958 has been a stonking 19.3%.

The guidance from the centennial cycle is also encouraging; in 1718, 1818 and 1918 the respective annual returns for the UK market were +0.6%, +5.5%, and +11.0% ­ a steady progression of increasing returns suggesting a return of around 16% in 2018!

In the Chinese calendar it will be the year of the dog, which is excellent news. Since 1950, dog years (despite the name) have the best record of returns of the 12 zodiac signs. Since 1950, the average annual return for the S&P 500 Index has been 16.8% in dog years.

And, finally, the US presidential cycle has a significant effect on equity markets worldwide, including in the UK. 2018 will be the second year in the cycle and on average the UK market has seen returns of 2.0% in the second year of this cycle.

Article first appeared in Money Observer

Further articles on the market in January.

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