Investing By Day of the Month

Here’s a breakdown of how well the stock market has performed during the first 10 trading days of the month. Each line is based on S&P 500’s cumulative gain on each particular trading day of the month (i.e., being long on the X day of the month, then all cash until the X day of the following month).
The clear winners are the first three days of the month. In fact, stocks aren’t worth the bother for the next seven days. (I know the last few days of the month are also quite good, but I’ll look at that another time.)
If you had invested solely during the first three days of each month, you would have made 5,824% (dividends not included) over the last 78 years. Even though this represents a small sliver of time (about 13.7%), it’s still a hefty portion of the S&P 500 gain which is about 14,000%.
The combined return of the fourth through tenth day is a tad over 100% which is less than inflation.
Here’s a breakdown of the average daily gains:

Day Gain
First 0.115%
Second 0.166%
Third 0.155%
Fourth 0.033%
Fifth 0.018%
Sixth -0.042%
Seventh 0.029%
Eighth 0.000%
Ninth 0.046%
Tenth -0.011%

To give you a reference point, a daily return of 0.1% works out to over 28% a year.

Posted by on January 26th, 2010 at 10:12 pm

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