Old traders have taught me a lot about the markets. Many of their lessons apply to life as well. One example is an old saying I learned decades ago: “To know what everyone knows is to know nothing.”
It’s possible some great philosopher once said that. But the gentleman who I first heard it from wasn’t a philosopher. He had spent more than 50 years trading on the floor of the exchange.
He liked to tell me about his first week on the job. It was in October 1962 … the Cuban Missile Crisis. He was hired as a market maker. He asked his boss what to do about a possible nuclear war. The answer was another life lesson — buy.
His boss told him that if we avoid war, the market will skyrocket. If we don’t avoid war, it doesn’t matter. In other words, when times are really bad, buy.
This was an example of an edge. Edges are the statistical or strategic advantage that gives a trader a higher probability of making profitable trades over the long term.
In the Cuban Missile Crisis, the edge was realizing that short-term crises always end.
An edge comes from knowing something different. Or at least seeing something in a unique way. After all, to know what everyone knows is to know nothing. Truth is, you’re just not going to make money with simple tools like price-to-earnings ratios and 200-day moving averages.
For some traders, the calendar provides an edge. It’s one of those things not everyone knows about.
Gain an Edge in the Market With the Calendar
The calendar identifies seasonal trades. A popular example is “sell in May and go away.” This market wisdom dates back to the 1800s. The idea started in London. Stocks tended to do poorly in the six months starting in May. They did much better in the other six months of the year.
It still works in markets around the world. The best six months start on November 1 in Asian, European and American markets.
Seasonals extend far beyond the best six months to own stocks. There are shorter-term seasonals. For example, there are trades to make around some holidays and trades based on options expiration, which always occurs on the third Friday of the month.
And it’s not just stock markets that have seasonal tendencies. Sectors and even individual stocks have seasonal trends.
For example, consumer staples usually do well from the end of July through mid-August. Stocks struggled during that window this year. The S&P 500 gained about 1%.
But if you knew about seasonals, you weren’t looking at the S&P 500. You were searching for an individual stock in the consumer staple sector. You might have found Pilgrim’s Pride Corporation (Nasdaq: PPC). This chicken and pork processor carries a Green Zone Power Rating of 70. That’s bullish.
PPC gained more than 20% while the broad market struggled over that period. This shows why the calendar should be in your investing toolbox.
To help you gain a real edge in the market, I’ve prepared new research that reveals how the calendar can be used to identify trading opportunities in a way that would have delivered, at a minimum, double-digit annual gains every year over the past decade.
To learn why the calendar works and how you can start using it to guide your investments right away, sign up for my free broadcast here.
During my event on Tuesday, October 24 at 1 p.m. ET, I’ll be sharing the latest trade recommendation that follows the calendar, so you don’t want to miss it.
Editor, Precision Profits